Africa Telecoms - Issue 14

issue 14

country focuses on:

Kenya Uganda Ethiopia

Wireless in, wallets out

THE SILENT REVOLUTION thought leadership interview

Stephen Elop

ZAR 29.95 us$ 3.50 uk£ 2.25 EU€ 2.95 rest of africa us$ 2.95

CEO, NOKIA

REGULARS regulars

04 Guest Editorial Mwambu Wanendeya, Vice President and Head of Communications Africa at Ericsson

CONTENTS

20

ISSUE 14

Thought Leadership

An exclusive interview with Stephen Elop, the new CEO of Nokia

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.

42 Statistics

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 14

Mobile 28 Giving Telephony Wings

Brett Haggard takes a look how Red Bull Mobile differs from its predecessor, Virgin Mobile.

The Silent Revolution

36

The future shape of M-Banking is unpredictable even as it gains the status of a new industry

issue 14

44 Smartphones

country focuses on:

Kenya uganda ethiopia

in Africa

THE SILENT REVOLUTION

Michael Flanagan discusses the expected data demands and the customer-centric responses

52

thought leadership interview

Stephen Elop

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

Reg Swart highlights the juxtaposition of evolutionary and revolutionary factors that will make 2011 a pivotal year for mobile financial services in Africa

74

Bradley Shaw discusses the innovative short-range connectivity promises that will transform mobile phone transactions

CEO, NOKIa

FOR AFRICA TELECOMS

Once In A Lifetime Opportunity

Wireless in, Wallets out

WIRELESS IN, WaLLETS OUT

58 Q&A

with Jeremy Leach, Divisional Director and Head of Microinsurance, Hollard Insurance

78 Job Listing

A list of the latest telecoms positions from across Africa.

80 Last Word

The strange case of a granny that cut Armenia and Georgia’s internet cable.

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, Simon Dingle, Brett Haggard, Michael Flanagan, Zachary Ochieng, Reg Swart, Echel Adui, Protus Onyangu, Bradley Shaw, Mohammed Khan, Poyraz Ozkan.

Africa Telecoms and Africa Telecoms Online are published by: 3i Publishing Unit 9 & 10, Planet Art 2, 32 Jamieson Street, Cape Town 8001 T: +27 21 426 5590 E: info@3ipublishing.co.za www.3ipublishing.co.za www.africatelecomsonline.com

BPA Audited Average Qualified Circulation from Nov 10 – Jan 11, 9989 per edition.

Issue 14 AFRICA TELECOMS 3

Guest Editorial

MwambuWanendeya Vice President and Head of Communications Africa at Ericsson

‘‘

In the future, consumers will be able to define their own rules for how and when they like to communicate. Depending on their own preferences, users can redirect voice calls to one device and video calls to another device in any order and at any time.

4 AFRICA TELECOMS Issue 14

‘‘

There have been many exciting things happening recently at Ericsson but one major highlight was the IMS MMTel launch in Rwanda. This was the first commercial deployment of IMS solutions across Africa and is allowing MTN Rwandacell customers to talk to and see friends and family, no matter where they are.

Subscribers can start a real-time voice call and upgrade it to a video call or use a chat session which gives a new and more extensive communication possibility. They can also add new users to an ongoing call and start a conference.

Pre-paid as well as post-paid subscribers can benefit from these new communication services even if the users are outside Rwanda. This IP (MMTel) based solution brings people closer together through video and chat communication and introduces a more flexible and modern lifestyle.

In the future, consumers will be able to define their own rules for how and when they like to communicate. Depending on their own preferences, users can redirect voice calls to one device and video calls to another device in any order and at any time.

IMS MMTel is a standardized solution for offering Voice over Internet Protocol (VoIP) based high quality telephony and multimedia services. IMS MMTel will play a major role in the service control of voice and multimedia communication services in the transformation to IP and Long

Term Evolution (LTE) networks.

The IMS MMTel is the solution for cost-effective communication service production and the platform for offering new services. New enriched, flexible, fast and costefficient multimedia services entering the market enable MTN Rwandacell to fully utilize their up-to-date network to provide more novel and high quality communication services.

In addition to this exciting project in Rwanda, Ericsson has been involved in several other important initiatives in the last few months – including the creation of Africa’s first “Digital City” in collaboration with the City of Johannesburg.

The recently launched Johannesburg Broadband Network Project has focused on connecting the City of Johannesburg through the laying of next-generation fibre optic network cables while leveraging Ericsson’s Multiprotocol Label Switching (MPLS) technology in order to deliver faster and more reliable broadband services.

Upon completion, this will cover all eight regions in the City of Johannesburg, providing voice and broadband access alongside a variety of relevant solutions in various fields such as education, health and even power.

We would like to thank you for the support you provide Ericsson and ask you to please stay tuned for more exciting and technological breakthroughs from us! AT

news

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

INTELSAT NEW DAWN LAUNCH SUCCESSFUL: EXPANDS AFRICA’S COMMUNICATIONS INFRASTRUCTURE AT 32.8º EAST Intelsat S.A., the world’s leading provider of fixed satellite services, and Arianespace have successfully launched the Intelsat New Dawn satellite. The Ariane 5 vehicle lifted off from Kourou, French Guiana on 22 April 2011.

The Intelsat New Dawn satellite is owned by a joint venture between a consortium led by Convergence Partners and Intelsat. The satellite’s 28 C-band and 24 Ku-band 36 MHz transponder units are designed specifically to supply critical communications infrastructure for African customers, who have experienced exceptional growth along with the development of the region.

Operating from a geostationary orbital slot at 32.8º East, Intelsat New Dawn will be ideally positioned to serve Africa through a payload optimized to deliver new capacity for voice, wireless backhaul, fixed line and wireless infrastructure, broadband and media– the fastest growing satellite-based applications in Africa. “Intelsat and the African continent share a 40-year history in the development of Africa’s telecommunications infrastructure,” said Dave McGlade, Intelsat CEO. “Intelsat New Dawn will be integrated with the resilient Intelsat fleet, allowing us to expand and enhance the vital communications services that are provided by our customers to business consumers throughout Africa.”

Andile Ngcaba, Chairman of Convergence Partners, said, “The satellite will not only deliver crucial services specifically tailored for Africa, it will also herald the dawn of a new era where Africans enjoy far greater involvement in the space communications industry.”

Intelsat New Dawn is the first of eight satellites slated for launch over the next two years and is part of the largest satellite program in Intelsat’s history. The investment program is expected to provide enhanced high-powered capacity to Intelsat’s global fleet. Intelsat’s next launch is expected to be the Intelsat 18 satellite, slated for later in 2011. AT

GILAT SATCOM INSTALLS iDIRECT HUB TO EXPAND BROADBAND SERVICES IN NIGERIA iDirect platform to integrate with terrestrial network, support wide range of vertical applications Gilat Satcom, a leading provider of domestic and international fiber and satellite-based connectivity services in Africa, Asia and the Middle East, has successfully launched an iDirect Evolutionbased service in Nigeria.

Through a new local teleport equipped with an iDirect hub, Gilat Satcom will expand its reach throughout the country, delivering C-band high-speed service. iDirect is a world leader in satellite-based IP communications technology.

Gilat Satcom has integrated the iDirect platform with an MPLS-enabled routing network to provide both dedicated and shared service.

The new service will support the needs of a wide range of customers, including banks, government offices, education facilities, healthcare providers, TV networks, cellular operators

>> There are more than 500 million mobile phone subscribers across Africa now versus 246 million in 2008. >>

6 AFRICA TELECOMS Issue 14

news and business enterprises. Customers can also take advantage of Gilat’s professional services, including fully-redundant power sourcing and local support.

The iDirect platform delivers significant improvements in bandwidth efficiency, producing a predictably high level of service quality. The platform ensures that critical IP applications can be run reliably and cost-effectively in countries where bandwidth is at a premium. iDirect’s Evolution product line supports a wide range of carrier IP data rates, FEC codes and modulation types, including up to 16APSK on outbound and up to 8PSK on the inbound.

A spokesman for Gilat Satcom explained, “We are pleased that Gilat Satcom selected the iDirect platform for this important business expansion. With the iDirect platform, Gilat Satcom can offer a broad range of services and achieve bandwidth efficiency gains that are so critical in a capacity constrained region.

Organizations in Nigeria now have greater access to local and global communications to drive economic growth and social development.” AT

NOKIA SIEMENS NETWORKS (NSN) AND JUNIPER NETWORKS CONDUCT 100G INTEROPERABILITY TRIAL Move towards commercial reality of 100G data transport over long distances Nokia Siemens Networks and Juniper have successfully conducted 100 Gbps interoperability testing between Optical Transport Network (OTN) equipment and the routers. The trial was conducted at Nokia Siemens Networks’ ResIP Center in Munich, Germany. NSN will demonstrate the tested 100G line cards at the OFC/NFOEC conference in Los Angeles, California.

The trial was conducted to test seamless interworking on NSN’s hiT 7300 DWDM platform and Juniper’s T1600 core router, using the native 100 Gbps Ethernet interface.

Commercial roll-out for 100G on Nokia Siemens Networks’ hiT 7300 is scheduled for mid-2011.

“Nokia Siemens Networks is a leader in IP integration with extensive capabilities in optical transport and this achievement is a testimony of our successful partnership with it,” said Daniel Hua, senior vice president of the Core Business Unit at Juniper Networks. “We have many 100G customers, who are looking for expanded service and proven long haul capabilities that are critical to the further adoption of 100G in networks.”

“Interoperability of router and DWDM network elements is a prerequisite for carriers to build and upgrade their networks in a cost efficient manner,” added Marc Rouanne, head of Network Systems (NWS) and member of Executive Board of Nokia Siemens Networks. “The demonstration confirms that worldwide carriers and operators can transport high volumes of data over long distances along with ensuring excellent network performance.”

>> The continent had 4.4 million fixed terrestrial broadband users in 2009, according to research firm Africa Analysis. >>

Issue 14 AFRICA TELECOMS

7

news AFRICAN LEADERS COMMIT TO IMPROVE PUBLIC SERVICE DELIVERY THROUGH ICTs Aiming to accelerate social, economic and political development through e-Governance The 5th annual e-Governance Africa Forum, attended by some 150 delegates from twenty countries was recently held in Yaoundé, Cameroon, with both public and private sector stakeholders resolving to intensify all efforts to improve governance and service delivery through the use of information and communications technologies (ICTs). Organised by the Commonwealth Telecommunications Organisation (CTO), and hosted by the Government of Cameroon through its Ministry of Posts and Telecoms and the Telecommunications Regulatory Board (TRB), the conference was under the theme “Governance, Service Delivery and Democracy through the use of ICTs”.

Discussions at the conference centered on important e-Governance issues from the perspectives of policy, regulation, infrastructure financing, network development and public-privatepartnerships.

Declaring the conference open through a speech delivered on his behalf by the Cameroon’s Minister of Posts and Telecommunications, Hon Jean-Pierre Biyiti bi Essam, the Prime Minister and Head of Government of Cameroon, H.E. Philemon Yang said that Cameroon acknowledges the great potential that ICTs can bring to the country and has embraced a number of initiatives in a bid to expedite the development of programmes in various areas of the country.

He said, “As a country we believe in the potential benefits of adopting governance processes that allow for greater participation of the people.” He

also acknowledged that ICTs, through e-Governance can help the country and the rest of Africa to accelerate its socioeconomic development. H.E Yang listed a range of examples of ICT interventions undertaken by the Cameroonian government, and concluded by admonishing participants to offer their contributions in all forms to ensure that Africa’s e-Governance initiatives are successful to the benefits of the people.

In his welcoming remarks, the CTO’s CEO, Dr. Ekwow Spio-Garbrah, emphasised what effective e-Governance was all about, noting that increasingly most countries have recognised the need to have a National e-Governance Policy in order to translate their e-Gov vision into reality. He noted the growing and enormous power of ICTs to transform nations and societies, and urged developing countries, especially those in Africa to “cheetah pole-vault” policies, regulations and technology, and not just “leap-frog” them, if they hoped to catch up with the industrialised world.

He recommended that countries adopt the “PROFIT” model in examining what progress they were making in their e-government efforts. He described the model as permitting countries to examine their e-Governance policies (the P), their regulations (the R), their operating environment (the O), the available financing (the F), the state of ICT infrastructure (the I), and the technological choices (the T) that they need to make to make e-governance initiatives more affordable to citizens, businesses and communities.

He expressed the wish that participants realize the importance of human resource

capacity-building in making ICTs work for government, and the CTO over the years has done a lot to train many experts in its member countries to help implement e-Gov projects.

An address on “Smarter e-Government” by a representative of Huawei Technologies, Mr. He Ming, Vice-President of Network Solutions, focused on some of the partnerships and technological innovation that is making it possible for many countries to provide numerous e-Gov solutions that empower citizens and make governments far more efficient.

He noted that good e-Gov initiatives allow the public to enhance their trust in governments, and this in turn allows for smarter governments.

By driving transformation through ICTs, governments can jump to higher service levels, he said. Emerging governments are now becoming more interconnected, he explains.

Progressively, such governments become interactive, integrated and finally, virtual. Mr. Ming further noted that e-Governance ensures smarter government when the public is able to take full advantage of government policies and services and where civil servants work efficiently on service based user demands, leading to enhanced quality of life for all.

Other presentations at the conference were made by government officials and business executives from Senegal, Nigeria, Kenya, Zambia, South Africa, the UK, USA, China, Israel, Switzerland, Poland, Austria, Ghana, Botswana, Uganda, Sweden, Gabon, Chad and Central African Republic. AT

>> The largest fixed line broadband market is South Africa, followed in order of market size by Egypt, Morocco, Algeria and Tunisia. >>

8 AFRICA TELECOMS Issue 14

news AFDB APPROVES US$ 12 MILLION FOR SEYCHELLES SUBMARINE CABLE PROJECT The Board of Directors of the African Development Bank (AfDB) has approved a US$12 million senior private sector loan to finance the Seychelles East African System “SEAS”.

The project is designed to connect Seychelles to the global Internet exchange centers using high bandwidth link at lower costs.

The SEAS project will be co-financed by the European Investment Bank, and equity contributions split between the three shareholders: The Seychelles government, Cable and Wireless, Seychelles and airtel.

The project is aligned with the Seychelles’ National Information and Communication Technology Policy established in 2007. It is also consistent with AfDB 2008-2010 ICT and regional integration strategies, which recognize the crucial role played by infrastructure in supporting intra-regional and global trade as well as market integration. AT

NETWORK SPEED DOUBLES IN SOUTH AFRICAN FIRST FROM VODACOM SuperMobile is here. Double-speed HSPA+ technology utilising dual carrier is a commercial reality in South Africa as Vodacom opened its 43.2 Mbps network for business.

Vodacom has enabled more than 1,000 base stations with the new technology, meaning that major metropolitan areas across South Africa are covered from the outset.

Speaking about this new technology, CEO Pieter Uys said: “If something half the speed was already fast, this we should call this new technology superfast. Having said that, the SuperMobile experience isn’t about theoretical peak speeds only achievable in laboratories. We’re much more interested in how this technology increases network capacity and supports our goal of giving a decent connection speed to everyone in South Africa.

The technology has been up and running for some time but Vodacom wanted to have a critical mass of at least 1,000 base stations before flipping the switch to allow consumers access at up to double the speed. The company wanted to make sure that the service would be available in more than

just one city.”

Compatible modems are on sale at Vodacom Shops for under ZAR1,400 and free on certain data contracts.

Everything else remains the same – there’s no additional cost and normal data bundles can be used to access the service.

Vodacom will continue to roll the technology out rapidly, with the number of enabled base stations expected to double in the coming months. This investment also clears the path for a future upgrade to 86.4 Mbps.

Summing up, Pieter Uys said: “We’ve already got the widest data coverage in South Africa by some margin, but with this technology available through so many sites, I think we can also stake our claim to have the fastest network as well. We promised when we launched the new red Vodacom that the changes ran much deeper than switching colours and this is just a taste of the things to come. Red means better network, better customer experience, better value.

Red is Mofaya!” AT

>> Only Mauritius and Seychelles have broadband penetration of more than 5 percent, due to promoting investment in broadband. >>

Issue 14 AFRICA TELECOMS 9

news

AMAZON APOLOGIZES FOR SERVER OUTAGE, OFFERS CREDIT Amazon.com Inc. has apologized for the data-center outage that brought down major websites including Foursquare and Reddit and offered Web services customers a 10-day credit.

The outage at the data center near Dulles Airport, outside Washington, was a major stumble for the service.

Amazon provided a post-mortem report that said human error set off the outage. An automated errorrecovery mechanism then went out of control, and many computers became “stuck” in recovery mode.

In the post-mortem report, Amazon shared details about the events that occurred with the Amazon Elastic Compute Cloud (“EC2”).

The service is set up in a way that’s supposed to provide redundancy, by letting computers in a different “availability zone” take over when one fails. Amazon said that customers that were properly set up to run their computing tasks over multiple zones were largely unaffected, but that the error made it difficult to switch zones on the fly. It’s making changes to prevent the error from recurring.

The credit applies to all customers using the zone that went down, whether they were directly affected or not.

Amazon has not revealed how many customers were affected.

According to Amazon, the issues affecting EC2 customers primarily involved a subset of the Amazon

Elastic Block Store (“EBS”) volumes in a single Availability Zone within the US East Region that became unable to service read and write operations.

These are referred to as “stuck” volumes.

This caused instances trying to use these affected volumes to also get “stuck” when they attempted to read or write to them. In order to restore these volumes and stabilize the EBS cluster in that Availability Zone, Amazon disabled all control APIs (e.g. Create Volume, Attach Volume, Detach Volume, and Create Snapshot) for EBS in the affected Availability Zone for much of the duration of the event.

For two periods during the first day of the issue, the degraded EBS cluster affected the EBS APIs and caused high error rates and latencies for EBS calls to these APIs across the entire US East Region. As with any complicated operational issue, this one was caused by several root causes interacting with one another and therefore gives many opportunities to protect the service against any similar event reoccurring.

The trigger for this disastrous event was a network configuration change. Amazon has stated that they will audit the change process and increase the automation to prevent this mistake from happening in the future.

But the damage to perceptions about Cloud-Based Computing have certainly been damaged. AT

>> South Africa had 4.5 million 3G-capable handsets in 2009. >>

10 AFRICA TELECOMS Issue 14

news VENDOR RELATIVE INDUSTRY PERFORMANCE

RIM INTRODUCES NEW BLACKBERRY BOLD SMARTPHONES Research In Motion (RIM) has unveiled two new BlackBerry® Bold™ smartphones.

The high-performance BlackBerry Bold 9900 and 9930 smartphones feature a stunning and iconic design that integrates an incredibly easy-to-use BlackBerry keyboard with a brilliant, high resolution, capacitive touch screen.

These exceptional smartphones are built on a new, performance-driven platform powered by the BlackBerry® 7 operating system and designed to deliver the ultimate in communications, multimedia and productivity for users around the world.

“The new BlackBerry Bold smartphones and BlackBerry 7 OS are inspired by millions of customers around the world who want the ultimate combination of performance, functionality and style,” said Mike Lazaridis, President and Co-CEO, Research In Motion. “These fully-loaded and beautifully crafted smartphones offer a highly refined user experience with blazingly fast performance, a brilliant touch screen and an outstanding typing experience.”

Distinguished by an iconic design and the industry’s best keyboard, the BlackBerry Bold 9900 and 9930 smartphones feature the premium materials and finishes that characterize the BlackBerry Bold line. Both models have a lustrous exterior with a brushed stainless steel frame and a high-gloss glassweave backplate.

They are also the thinnest BlackBerry smartphones yet, at only 10.5mm. The quality materials and optimized design of the new BlackBerry Bold smartphones are instantly evident when held in the hand.

These BlackBerry Bold smartphones are built on a new performance-driven platform featuring a 1.2 GHz processor, Liquid Graphics™ touch screen, and support for high-speed 4G/HSPA+ wide area wireless networks.

Now, we excitedly await the launch of the Blackberry Playbook. AT

Market share tables by themselves give a good indication of which vendors did well or badly during a year, but they do not tell the whole story. More often than not, a strong or weak performance by a vendor is a result of the overall market growth of the device areas that the vendor participates in.

Gartner’s relative industry performance (RIP) index measures the difference between industry-specific growth for a company and actual growth, showing which are transforming their businesses by growing share or moving into new markets and choosing their customers wisely.

Several of the top 25 vendors performed significantly better than expected according to Gartner’s RIP index.

The four vendors that grew better than 10 percent beyond expectations on the RIP index were Broadcom, Marvell, Samsung Electronics and NXP. In contrast, four vendors missed expectations by more than 10 per cent: Rohm, Renesas Electronics, Nvidia and MediaTek. Gartner’s annual semiconductor market share analysis examines and ranks the worldwide and regional revenue for more than 275 semiconductor suppliers in 62 separate product categories and eight major market categories.

It serves as a benchmark for semiconductor industry performance, as well as a means for individual companies to assess their revenue performance against their competitors’.

Additional information is provided in the Gartner report “Market Share Analysis: Total Semiconductor Revenue, Worldwide, 2010.” The report provides the worldwide market share rankings for the top 25 vendors in 2010. AT

>> According to Facebook statistics tracker Socialbakers, there were around 10.5 million Facebook users in Africa in 2010. >>

Issue 14 AFRICA TELECOMS 11

news

ETISALAT NIGERIA RENEWS MANAGED SERVICES CONTRACT WITH ALCATEL-LUCENT Alcatel-Lucent has been selected by Etisalat Nigeria (EMTS, Emerging Market Telecommunication Services), one of the fastest growing mobile service operators in Nigeria, to continue providing managed services for their expanding mobile network.

The operator’s subscriber base has dramatically grown 120 percent year-over-year to over seven million subscribers in just two years.

Alcatel-Lucent will continue supporting Etisalat Nigeria’s network transformation by developing and delivering new end-user services as required to meet its customers’ growing demands.

The renewed two-year multivendor managed services agreement will significantly reduce operational expenses, while improving

service quality for Etisalat Nigeria’s subscribers.

Alcatel-Lucent will be responsible for ensuring the high-quality and reliable performance of the network in the South-west of the country including Lagos by providing world class services which include network operations, consulting, design, network optimization, spare parts management, maintenance services, and project management.

By outsourcing the day-to-day operations and maintenance to Alcatel-Lucent, Etisalat Nigeria will be able to focus on their core business issues such as increasing average revenue per user (ARPU) and ensuring increased network quality and affordability while avoiding the complexity of network operations and management.

“This new contract further strengthens our long-standing cooperation with Etisalat and highlights their confidence in our ability to create, deliver and manage complex next-generation networks with strong local support capabilities,” said Adolfo Hernandez, President of Alcatel-Lucent’s activities in Europe, Middle East and Africa. “With our professional and managed services and advanced technologies, Alcatel-Lucent is committed to helping Etisalat’s sustainable development in Nigeria and to ensure the highest level of service to its customers located throughout the country.”

This agreement comes hot on the heels of the Alcatel-Lucent and China Mobile wide-ranging joint memorandum of understanding recently signed. The purpose of the MOU is to pursue pioneering developments in next generation mobile communications including further co-development around Alcatel-Lucent’s powerful lightRadio™ technology. The partnership agreement was signed by Romano Valussi, President of Alcatel-Lucent in China, and Bill Huang, president of China Mobile Research Institute in a signing ceremony in Beijing.

The MOU will cover: • the evolution of mobile network architectures leveraging and integrating China Mobile’s Cloud-RAN and Alcatel-Lucent’s lightRadio and advanced antennas technology; • explore the evolution of core network structure on the basis of network virtualization; and • develop technologies and approaches for alternative energy use to achieve green ICT According to Ben Verwaayen, CEO of Alcatel-Lucent, who explained that “[T]his vital collaborative agreement will bring together two industry leaders, using joint research, to bring new breakthroughs to market at what we call ‘the speed of ideas’. AT

>> In total, 4.54 Terabytes of cable capacity is available across 13 submarine cables in Africa. These will further expand to 24.5 Terabytes 2011. >> 12 AFRICA TELECOMS Issue 14

news FINALLY, APPLE LAUNCH WHITE iPHONE 4!

image courtesy of: www.maxxonite.deviantart.com

According to website, ALL THINGS DIGITAL, the much delayed launch of the white iPhone 4 is finally upon us.

The nine-month delay was due to a lack of UV protection, according to Apple.

Apple senior vice president Phil Schiller told All Things Digital that similar to humans, especially those with fair skin, white iPhones need protection from the sun’s ultraviolet rays.

“It was challenging. It’s not as simple as making something white. There’s a lot more that goes into both the material science of it-how it holds up over time, but also in how it all works with the sensors,” Schiller said.

This lead many to believe that the sensor reference alluded to the camera. In an interview with PC WORLD, Apple cofounder, Steve Wozniak speculated back in January that the camera could have been the major issue.

Nevertheless, Apple has finally resolved the sensor issue and the white iPhone 4 is on sale in the US and 27 other countries.

Now, all one needs is some sun block. AT

Gadgets

>>

>>

Otterbox Reflex Series for iPhone 4

H Uncool HH Poor HHH Average HHHH Excellent

HHHHH Awesome

Acer be Touch E140

Rating: HH PRICE: TBC

Rating: HHHH PRICE: R 2 200

The Lowdown: Impact resistant reflex design, docking access system, and supplied screen protector.

Most smart phone purchases go hand in hand with the selection of a suitable cover. Generally the desired criteria are one that offers durability, protection and overall ergonomic appeal.

The Reflex Series from Otter Box is a sturdy, impact resistant outer shell that offers great protection. Its adaptive reflex zone technology provides a shock absorbing effect that directs the force of impact through the cover and not through your 3.5-inch Retina display. Its robust design will shrug off the usual day-to-day abuse a smart phone receives, even if it happens to belong to a deep core driller.

The every-day practicality of the Reflex Series falls a short however, its bulky design is rather a handful. The docking access system, whereby the cover slides apart, proves to be a bit cumbersome and contradictory to the ease-of-use and design functionality of so many of the available docking systems. The Reflex Series is also somewhat of an eye sore when considering the sleek, aesthetic good looks of the iPhone that it encapsulates.

The Lowdown: Comes with 2.8 inch touch screen display, Android 2.2 Froyo operating system, supports for Flash player 10.1,SD card, 3.2 mega pixel camera, an FM radio, 1300 MAH battery for increased usage, new device supports 3G+,HSDPA,Bluetooth and GPS. Acer’s new set of mobile phones are genuinely impressive. The Acer User Interface using Android OS is extremely customizable and comes preloaded with popular apps like Facebook, Twitter and Gmail. The phone has wi-fi802.11 b/g, and features 600MHz processor.

The device weighs115 gms, gets 6 hours talk time and 400 hours standby time. Acer be Touch E140 is the advanced edition of E130.

The App offering on the Android is vast, and very competitive with the Apple iStore which will attract potential users. Overall a light stylish build coupled with a market leading OS provides a great new entry for ACER. Finally Acer Sync is an easy to use Sync software solution that will sync your device with contacts, calendar and mail over cloud using Google, making it a faster and easy option than using cable or similar Bluetooth options.

14 AFRICA TELECOMS Issue 14

Gadgets

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

>>

>>

Vodacom Mi-Fi R201

Parrot AR.Drone

Rating: HHHH PRICE: R 2 200

Rating: HHH PRICE: R 3 000

The Lowdown: Mobile hotspot with 3G connectivity, Battery-powered, MicroSD slot for shared storage.

Internet connectivity is playing an increasingly important role in our lives, whether it’s for business or leisure. We could be at the airport waiting for a flight, and need to send some last-minute emails. Or we could be at a coffee shop and decide to watch a movie: booking tickets online is the quickest way.

While our smartphones can do some of these things, it’s always a lot easier to whip out a laptop and use a real computer to get the job done.

Vodacom’s Mi-Fi R201 is one way to eliminate the hassle of plugging in a USB data modem and connecting to the web. Instead, the R201 does all the dirty work for you. It connects to the web, and then acts as a wireless hotspot for any wi-fi devices you might have.

Connectivity is stable and quick, and the battery in the Mi-Fi lasts for about four hours. One less thing to plug into your laptop means one less thing putting a drain on its battery. This is definitely one for the mobile adventurer.

The Lowdown: Fully functional quadricopter, Controlled via iPhone app, Dual cameras for video and photos.

Parrot, a company well-known for its wireless gadgets, has brought out a Wi-Fi controlled quadricopter it calls the AR.Drone. What makes the AR.Drone even cooler than a remote-controlled helicopter is the fact that it is controlled by a smartphone application loaded on an iPhone or Android phone.

The application uses the phone’s accelerometers to control the AR.Drone’s movements, translating how you hold the phone into movement. The mounted cameras transmit real-time video back to the phone so the pilot knows where he’s going; this “augmented reality” experience is the inspiration behind the AR.Drone’s name.

Each charge gets you 15 minutes of flight, and it takes only 90 minutes to recharge the batteries back to full. It’s advisable to purchase a spare, though, to extend the enjoyment that is to be had into 30-minute territory.

It’s a wee bit expensive considering the playtime on offer, but for those with a bit of cash the experience is unparalleled.

Issue 14 AFRICA TELECOMS 15

Motorola Defy MB525

H Uncool HH Poor HHH Average HHHH Excellent

>>

>>

Gadgets

HHHHH Awesome

Nintendo 3DS

Rating: HHHH PRICE: R 4 000

Rating: HHHH PRICE: R 2 800

The Lowdown: Toughened and water-resistant exterior, Android 2.1 operating system, Compact design with 3.7-inch touch screen.

Hands up if you’ve heard of somebody who’s dropped their iPhone and had its glass screen shatter. Add five points if that person was you.

Chances are you’ll probably be interested in something like the Motorola MB525. It’s not the fastest smartphone with the largest amount of memory or most powerful graphics chip. Instead, it has a fantastic battery life (as far as smartphones go, 3 days is phenomenal) and boasts a “life proof” exterior.

There are all manner of plugs and stoppers to help it gain an IPX67 rating. This means it is dust proof and waterproof. In the latter case it can be dunked in water that’s 1 metre deep for up to 30 minutes. If you find yourself needing a phone more waterproof than that, you probably shouldn’t be around electronic devices.

It runs Android 2.1 – not the most recent, but modern and stable enough to support most applications on the marketplace. The display is really great, even the smallest fonts look good, and the touch panel is fantastically responsive. The iPhone has long been the benchmark for touch responsiveness, and the Defy matches Apple’s tech.

The Lowdown: 3D gaming without glasses, Dual cameras for 3D photos, Second touchscreen for interactive input.

You don’t have to be a kid to appreciate gaming, and you definitely don’t need to be young at heart to get excited over the 3D technology that’s coming to market.

Some people might find it a bit gimmicky, thanks to the glasses, but Nintendo’s got that problem licked: use a glasses-free 3D display.

That display was then crammed into its new handheld console, alongside a conventional 2D touch-screen. Powering them both is a new, faster processor with an even more impressive graphics chip.

The result? 3D that works. You look at the display, and instead of things popping out at you the on-screen images have depth. Sadly, some people might get headaches, or simply not be able to focus on the 3D images, but for the most part it’s a successful implementation.

The games aren’t just for show, either. They feel properly produced and take advantage of the 3D display in a way that doesn’t feel tacked on.

Sony’s next PSP is a while off, but the 3DS is really onto something and it’s cemented itself as an innovation in gaming. Pity about the 3 hour battery life, though.

16 AFRICA TELECOMS Issue 14

Gadgets

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

>>

>>

TomTom Via 110

BlackBerry Bold 9780

Rating: HHH PRICE: R 2 000

Rating: HHHHH PRICE: R 5 000

The Lowdown: New generation navigation device, Bluetooth hands-free support, Large 4.3” display.

TomTom’s got a new range of easier-to-use GPS navigators, and they’re sold under the Via nameplate. The idea is that they’re simpler to set up and make entering destinations quicker than before.

To aid in the former, the Via 110 has a newly designed integrated windscreen mount. It’s part of the device’s main body, folding away for easier storage. When it needs to be attached, simply push it up against the windscreen and twist the locking mechanism. Slim, compact and smart.

Next up is the actual interface. While there are fewer steps to entering a destination, the screen isn’t as responsive as we’ve seen on other models. This is a big hassle and it actually slows down the process. Of course, you can use the voice input system to enter an address, but this is also a bit hit and miss.

It lacks traffic – a feature on some competing models at this price point – but has Bluetooth for hands-free calling. Overall, it ticks the right boxes but doesn’t quite manage to pull off the execution in convincing fashion.

The Lowdown: Runs on BlackBerry OS 6, More RAM, Better camera.

BlackBerries are popular business phones, and for good reason.

They’re the most capable devices when it comes to handling mail on a mobile platform. There’s also the big draw of BBM, and the allinclusive fees for Internet access.

The stalwart in the range, the Bold, has recently had a face-lift of sorts. It’s now a bit sleeker and smaller, yet boasts an upgraded 5-megapixel camera (from the previous 3.2-megapixel snapper) and RAM has doubled to 512MB. This helps the new operating system, version 6, runs as smoothly as it does on the flagship Torch.

Another fantastic feature in 6 include the universal search function, allowing you to start typing at the home screen and immediately get search results for any data on the phone – we’ve not used a better search system on any other phone.

If you’ve been waiting for your upgrade, but aren’t convinced by the Torch, the new Bold is definitely worth looking at. It’s everything you’ve come to love about BlackBerries, in the shape you know, but with added awesomeness and a shiny new coat.

Issue 14 AFRICA TELECOMS 17

ecosystem

Building the third

18 AFRICA TELECOMS Issue 14

thought leadership Stephen Elop, the new CEO of Nokia, has his work cut out for him.

Reinventing Nokia as a smartphone manufacturer is only part of the challenge – a broader objective is in stopping Google from dominating the market.

O

n 21 April 2011 Nokia and Microsoft ratified the partnership that they announced in February. The Finnish cellular giant has hit an all-time low in terms of its smartphone market share with its Symbian operating system being displaced by Google’s Android that is now the leader with an estimated 33% global market share.

With Microsoft in tow, it’s all eyes on Nokia’s new CEO Stephen Elop and the company’s next move that will be a Windows Phone-based device promised by the end of the year.

I met with Elop in Dubai in March to discuss his strategy for re-establishing Nokia in the smartphone market and perhaps diversifying its product range.

Emerging markets and new revenue streams were also put on the table – but Elop pointed to a more serious war underway in terms of mobile ecosystem providers.

The agreement Elop has struck with Microsoft goes beyond Windows Phone. The two companies will also work on a new advertising platform that will make its way into Xbox LIVE, Windows Live, Bing and other Microsoft product sets. This platform will provide Nokia with a fresh revenue stream and should be music to Nokia shareholders’ ears.

Issue 14 AFRICA TELECOMS 19

thought leadership

BY Simon Dingle In with the old

The focus, however, remains on Nokia’s core business as a device manufacturer. Success in this space will depend on the company attracting developers to its platforms, and this includes existing systems.

Developers I have spoken to are not convinced. They see Symbian as a dead-end street. If anything, they are looking to Windows Phone as a potential platform – but many will switch to developing for Android or iOS instead.

Winning them over – or back – has to be a preoccupation for Nokia and is something Elop is fully aware of.

“I think the best message for a developer to embrace, if you like, is to look closely at the strength that Nokia has, and what we bring to the market as it relates to Symbian today, and in the months and years ahead – because Symbian still has a large role to play even as we transition and focus on other things in the future,” he says.

“For example, in my recent travels, which have included the Middle East and Africa, where we are today, last week in Russia and so forth, there is a wide range of markets where

20 AFRICA TELECOMS Issue 14

Nokia the brand and Symbian the platform are remarkably strong,” continues Elop.

“And as we’ve described, we expect tens of millions of devices still to ship in the months and years ahead. There’s a tremendous opportunity there for developers, because when you look at the absolute scale of the operation, you say ‘wow, there’s something really there’, and so we’re definitely encouraging developers to continue with that, while also recognising that we hope to create a new opportunity around Windows Phone in the future,” he adds.

Another challenge facing Nokia is how it will differentiate itself from other Windows Phone manufacturers. Services would be an obvious way to achieve this and Nokia has a powerful set of services grouped under its Ovi brand.

However, the Microsoft agreement will see Nokia handing its services over for integration into Windows Phone and to the benefit of all manufacturers shipping the operating system. It seems a curious move at first, until Elop outlines his objectives.

“First of all, the highest order point of differentiation that

‘‘

Our number one competitor isn’t a Samsung or an HTC or whatever – it is Android. And so as we proceed in the months ahead, our expectation is that we have to take steps to ensure that the Windows Phone ecosystem is very strong and very powerful.

‘‘

we need to focus on is Windows Phone versus Android versus Apple,” he explains.

“Our number one competitor isn’t a Samsung or an HTC or whatever – it is Android. And so as we proceed in the months ahead, our expectation is that we have to take steps to ensure that the Windows Phone ecosystem is very strong and very powerful. Whether it’s us or even our competitors within Windows Phone who have access to some of the best technologies, we want to make sure that the platform holistically is very strong,” says Elop.

“Now that being said, we have a number of different areas, be it in services, in hardware or in software, that can and will contribute to our efforts to ensure that we can differentiate,” he continues.

“While mapping and navigation and location-based services are something that are crucial in the ecosystem, we will also make sure that we do unique and differentiated things on our devices, within that ecosystem, so that we work to stand apart from everybody else. But again, I emphasise, our principle competition is Android.”

thought leadership Turning it around

Windows Phone had a less than ideal launch phase and uptake has been slow, to say the least. Last year Microsoft’s global market share in terms of smartphones was estimated at 5%.

This year it has actually lost ground and dropped to 3%, according to Canalys.

Elop and his colleagues at Nokia obviously think that this can be turned around.

“I think there’s an opportunity to first of all differentiate on the range and quality of services that are provided within that ecosystem. For example, Microsoft brings certain properties – take the Xbox gaming environment, which in certain environments is a very powerful capability,” he says.

“I think that we also bring a quality of mapping and location-based services that is better than and is differentiated from everything else, so there are elements of that. But when you look at it from a developer perspective, there’s actually a range of things you consider: does it have breadth, are there lots of people using Windows Phone devices? Well, not today – but clearly with the relationship between Nokia and Microsoft, we believe that there will quickly be tens of millions of people who are using these devices,” states Elop.

“There needs to be great monetisation for the developers,” he adds.

“Nokia brings operator billing with more operators in more countries and regions around the world than anyone else by far, and that we will bring to the ecosystem for general use,” he promises.

“Developers need great tools; they need a solid development platform. Clearly that’s part of it already in terms of what Microsoft brings to the table. And then of course developers need the support from the vendors, such as Nokia. For example, here in Dubai today we’re asking what we can do with developers to help them build local applications and local capability,” he says.

“At Ramadan, for example, there were applications supported and encouraged by Nokia, delivered by our development community, that were unique for this region at that time of the calendar. And it’s those types of things that we will do to ensure that this is a great platform for developers to target as they go forward.”

Building out

There has also been speculation that Nokia is working on a tablet device. In the past we have seen diversified products from the company, such as its Booklet 3G laptop computer.

Elop sees potential for other devices in the future, but isn’t sold on tablets unless Nokia can do something wholly different with the form-factor.

Issue 14 AFRICA TELECOMS 21

thought leadership

22 AFRICA TELECOMS Issue 14

“

“

Local content, local applications and local services are hugely important to our efforts to differentiate. And indeed the strength of the Nokia brand in emerging markets and Africa and other places is largely because we have delivered more than anyone else on the promise of a great experience that makes sense within your local environment

“We are building and contributing to this ecosystem with the belief that the opportunity is much larger than mobile phones, smartphones – however you would characterise them,” he explains.

“The challenge I have for our team is to make sure that as we enter adjacent markets, that we have a unique and differentiated position. Today you can go and buy one of 150 or 180 – I’ve lost count – different tablets out there that frankly you can’t tell apart, and most of them aren’t particularly useful for much,” says Elop.

“There are a couple that are very successful and we know who some of those are, at least one of them, and that’s fine. But Nokia has to look at itself – its market opportunity, the strength of its ecosystem, the geographies where it has strength – and consider what we can do that sets us apart and goes after a unique opportunity.”

He continues: “We have some specific ideas, but are not announcing things there today. It’s not just about tablets – there are other devices, platforms, things that can be done, that take advantage of the ecosystem, and contribute to the ecosystem, and these are places where you may see us play in the future.”

Nokia is also looking to emerging markets as a key strategy for the future. In these markets it has tried to play a more meaningful role than some of its competitors who are very good at talking the talk instead of delivering real value.

I ask Elop whether Nokia has placed an emphasis on hyper-localised content that is not only designed for particular regions, but is actually developed by local developers. “You’ve just described a key element of our strategy, and that is the local aspect,” agrees Elop.

“Local content, local applications and local services are hugely important to our efforts to differentiate. And indeed the strength of the Nokia brand in emerging markets and Africa and other places is largely because we have delivered more than anyone else on the promise of a great experience that makes sense within your local environment,” he adds.

thought leadership

The next billion

Nevertheless, manufacturers still have a long way to go in terms of scaling prices for the broader market in developing economies. Nokia has managed to get its non-feature phones down to ridiculously low prices, but smartphones are still just out of reach of the average emerging market user. This is changing rapidly, however. Elop believes that affordable devices in terms of these markets is around the corner.

“I think it’s much sooner than people realise. The rate at which price points can be addressed, starting at the high end and moving well down, with smartphone experiences or ‘smartphone like’ experiences even plunging below the prices [$100 mentioned in discussion], I think there’s a lot of opportunity there,” he says.

“There’s work that we’ve already done to bring some elements of a ‘smartphone like’ experience to very inexpensive handsets. The thing that I keep in mind, and this is particularly true in a region like Africa, is that today 80% of the world’s population is within cell phone signal range,” continues Elop.

24 AFRICA TELECOMS Issue 14

“

“

“While other ecosystems and players churn out devices at a furious rate, we’re far more focused on making sure that you have a great experience that connects you. You know our overall statement about the company – ‘connecting people’ – well, that’s about connecting people with their community, with the environment in which they operate, with opportunity. That’s what Nokia is focused on.

“And so, when you think about it, yes we’ll have great devices, we’ll have wonderful software and services that go with that, but to the extent that we deliver an experience that is unique and differentiated in the environment in which people are working … you’ve seen it already,” he says.

“And we can go so much further with that. That’s part of the excitement that travelling around to these different regions is: you feel that, you meet people whose lives have been changed by the experience. And that’s not just about placing a phone call, or doing an SMS, it’s the whole experience.”

Microsoft and Nokia need each other and may just be the perfect combination to bring the fight to Apple and Google.

“They’re close enough to a tower, and yet only 20% of them have had an Internet experience. And that’s why we’ve called this strategy ‘the next billion’. How do we bring the next billion to their first Internet experience, to give them their first banking experience, using their device? Some of that is smartphone capability, some of it is lower in the price point than that, but I think you’re going to see things come down much faster than anyone would have previously predicted,” he says.

“And in our relationship with Microsoft that was a key part of the conversation with them: to make sure we jointly agreed to that, understood how it would be done, and could begin the engineering work to make it happen.”

Elop reinforced his previous statements that the first Windows Phone-based Nokia product will be on sale before the end of 2011. One can only imagine the kind of frenetic work underway behind the scenes at Nokia to pull that one off.

The smartphone market is inherently frenetic. Apple set the pace when it committed to annual iPhone updates. The market scrambles to keep up and revisions come hard and fast.

Android seems an unstoppable force at the moment, but Elop apparently sees it as inevitable that Google is kept away from a dominant market share.

Microsoft and Nokia need each other and may just be the perfect combination to bring the fight to Apple and Google. By this time next year we should know for sure. AT

26 AFRICA TELECOMS Issue 14

Giving mobile telephony

By Brett Haggard

W

ith an attractive line-up of handsets, competitive tariff packages and brand awareness that’s second to none, Cell C’s launch of Red Bull Mobile in South Africa has gotten a great reception from consumers.

But, when it launched in South Africa in 2006, Virgin Mobile had a similarly

positive reception. Yet it’s delivered a disappointing performance.

And, let’s face it, Virgin’s value proposition had all of those same things going for it as Red Bull Mobile testifies to have going for it today.

In fact, it’s arguable that Virgin’s brand is far bigger than Red Bull’s and that it has a much larger portfolio of products and services to leverage – like air travel,

banking, cosmetics and of course, media.

So what’s going to make things different this time around?

Where Virgin Mobile’s relationship with Cell C is as a mobile virtual network operator (MVNO), Red Bull Mobile is a branded reseller. And according to Simon Camerer, Executive Head of Marketing at Cell C, that makes all the difference.

Issue 14 AFRICA TELECOMS 27

‘‘

the core audience for Red Bull Mobile is 15 to 25 year olds.

But, in reality, the activity is likely to appeal to all fun and thrill-seeking individuals that are into technology, content and social media.

28 AFRICA TELECOMS Issue 14

The second (and, it seems, more successful) approach is to partner with another well-established brand, such as Red Bull.

Guerilla warfare

Before it developed its relationship with Red Bull, however, Cell C embarked on a bit of a guerilla move with Nike in the months leading up to the 2010 soccer world cup.

Camerer says that Nike has only done one other co-branded alliance in its history and that was with another of the world’s most prestigious brands, namely Apple, around a fitness centric add-on for its popular iPod media player.

“It was therefore quite a prestigious opportunity for us to pursue,” he says.

Cell C’s alliance with Nike took the form of a football-focused starter pack that included information around the games and players, as well as a DVD hosted by Theko Modise talking the customer through training tips. The activity also made use of a MXit bot, which provided similar content to the DVD. Timing was everything, however,

‘‘

Not an MVNO

While to the layperson this doesn’t seem like a massive difference, in reality it’s a pretty big distinction.

As an MVNO, Virgin has to meet specific regulatory requirements and buy services from Cell C in bulk, repackage them and for all intents and purposes operate independently.

With a branded reseller relationship, Cell C does all of the heavy lifting.

In fact, Red Bull Mobile activations count as Cell C activations.

Camerer says that Cell C is much more involved when the branded reseller model is employed. The idea is to identify customers that have an affinity to specific brands and bring telecoms value-added services to that segment.

There are a couple of ways a branded reseller activity can be carried out.

The product can either be an extension of Cell C’s brand, such as ‘Hola7’, which was a sub-brand devised to address an affinity with gospel music, or ‘Wink’ which was a sub-brand devised to bundle together the set of telecoms services a South African woman is likely to make use of.

and the Nike co-branded starter-pack, which was launched just before the 2010 soccer world cup took place, exceeded expectations.

Regardless of whether it’s taken the form of a sub-brand or a co-branded activity, Camerer says that each of the segments Cell C has set out to address with the branded reseller model has touched on at least 200,000 individuals.

“And the next big thing is Red Bull Mobile,” he says.

More high-profile, long-term activity

Camerer says the core audience for Red Bull Mobile is 15 to 25 year olds.

But, in reality, the activity is likely to appeal to all fun and thrill-seeking individuals that are into technology, content and social media.

South Africa is the fourth territory in which the Red Bull brand has been used to market telco services (prior to this, the brand has been used to launch services in Austria, Switzerland and Hungary).

Since the launch in South Africa, a fifth partnership has been setup with Mobistar in Belgium.

Red Bull Mobile is far from being a stock standard activity for Cell C. If you simply look at the weight Cell C has put behind its ‘next big thing’ it’s clear that this is a more high-profile, long-term activity.

Red Bull Mobile is being marketed inside Cell C’s stores and while there’s only a post-paid voice/data option right now, there’s a pre-paid voice/data option and dedicated data product designed to make use of Cell C’s speedy network on the table.

“It’s a much bigger deal for us,” Camerer says.

Not just about brand

Camerer says that the branded reseller arrangement with Red Bull is not just about using brand affinity to win customers, however.

The Red Bull brand stands for a whole bunch of things and the World of Red Bull, which is part of the telco offering, opens customers up to a content-driven experience that’s second to none.

Red Bull Media House, which is behind this partnership from Red Bull’s side, is one of the world’s biggest events companies and, as such, is run like a separate business.

The Formula One racing team is part of that and pretty much everything any of the events or activities Red Bull Media House orchestrates or takes part in generates content and eyeballs.

“Mobile is the ultimate opportunity

for extending that value proposition,” Camerer says.

And being able to access the content published online by Red Bull Media House requires connectivity.

That’s the primary reason all of the Red Bull Mobile packages come with a bundled data allowance and, in the coming month or so, a dedicated data product will be on offer.

There are many elements that make this offering so much more than ‘another’ cellular package.

And it seems like there’s enough differentiation between what Cell C and its packages have to offer customers, and what’s on offer via Red Bull Mobile.

Juggling brands

Camerer says that Red Bull Mobile will in all likelihood not be the only branded reseller agreement of this magnitude that Cell C embarks on in the coming year or so.

“How exactly the relationship works between ourselves and that partner depends entirely on who the brand is, what it stands for and how the brand owner wants it positioned.

“For this reason, a branded reseller agreement with another brand might not result in products and services that are delivered through Cell C’s retail environment.”

Camerer says that Cell C is not pretending to be Red Bull.

“We stand for something else and have

our own brand. People recognise that Red Bull is a global brand and through inference and association, Cell C does get some ‘halo effect’ there.

“But there is a distinct value proposition for Red Bull Mobile and it doesn’t conflict with any of the products or services offered under the Cell C banner,” he adds.

Before launching a new product or service, Camerer says that Cell C takes a view of the holistic customer experience.

“And before we put a product into the marketplace, we ensure that each store has a trained sales consultant that’s capable of providing great service to customers.

“That’s the reason each store has a dedicated Red Bull consultant in Red Bull gear and that Red Bull Mobile has a separate call centre, manned by agents that know everything there is to know about Red Bull Mobile and are able to deliver an experience that is consistent with that,” he explains.

Camerer says that there have been a number of current Cell C subscribers looking to move across to Red Bull Mobile and that a number of potential customers have come into one of Cell C’s retail stores looking for a Red Bull Mobile package and left with a Cell C package because of the hybrid post/prepaid options on offer.

“It’s still early days, however, and things will settle,” he says. AT

Products/Services on the horizon All of the products and services available through Red Bull Mobile are purpose built and Camerer says there’s been some discussion about bringing tablets to the stable.

Something that could work quite well, he says, is a great hardware item such as a Samsung Galaxy Tab that’s Red Bull branded, bundled with an attractive data package, backed by Cell C’s powerful data network and able to access all of the World of Red Bull content. Similarly, Camerer has confirmed the availability in the next two months of a Red Bull Mobile ‘speed stick’ with a customised user interface providing links to content exclusive to Red Bull Mobile subscribers.

Issue 14 AFRICA TELECOMS 29

advertorial

Remote possibilities to reduce OpEx

With demand for mobile data services continuing to grow apace in Africa, Vick Khalil Mamlouk, VP of Middle East and Africa, CommScope, explains how remote monitoring solutions can help operators to enhance their networks whilst improving their profit margins.

F

lattening voice revenues across Africa are forcing operators to invest in their networks to support data services.

There is high demand for such services from consumers, many of whom use their mobile phone as their primary or only device for internet access. Other initiatives, such as mHealth and mMoney, also show great promise for improving the quality of life for people across the continent. Additionally, businesses and organisations increasingly require data services over mobile networks – including internet, video and other applications. This presents a huge opportunity to African operators in the enterprise market.

The continent looks set to receive its first LTE networks this year with Telcom and Vodacom ready to go live in South Africa, while Namibia’s Leo is targeting a 2012 launch. However, the vast majority of network upgrades and deployments will remain focussed on improving the reach of 3G networks. As these networks continue to grow in size and complexity, so does the cost of maintaining and managing them. Therefore, a key objective for African operators is to identify areas where savings can be made, allowing them to fund new deployments and take advantage of the lucrative revenue opportunities data services present.

30 AFRICA TELECOMS Issue 14

Minimising site visits One major area of expense that wireless operators should look to streamline is their dependence upon network site visits. Currently, experienced technicians must regularly visit each site to configure equipment, perform maintenance and implement repairs. This inefficient use of a technician’s time is often costly, as is the added expense of subsidising their travel. This can be especially costly for countries in Africa, where base stations can often be widely dispersed across rugged terrain.

If operators adopt the ability to remotely monitor and control base station functions, they can vastly reduce the need for physical inspections. “Soft alarms” can warn operators when equipment begins to fall below optimum performance – allowing them to choose the best time to respond and thus enabling multiple problems to be solved in one visit. The ability to make remote adjustments, like altering thermostat settings, also completely negates the need for visits just to change infrastructure settings. For example, the remote tuning of antennas means orientation adjustments can be made as many times as necessary without any additional site visits. This also allows for inexpensive fine tuning to optimise network performance.

Currently, technicians often need to visit a site a second time to complete repairs, since they may not know the specific fault it is experiencing until they physically assess it. This knowledge

gap means that they often lack the necessary equipment or replacement parts to effect repairs on a first visit. However, with remote systems in place to monitor everything from smoke alarms to generators and site temperature, operators will have a far greater understanding of the specific problem that has occurred and technicians will be better prepared to solve faults immediately.

By remotely tracking equipment failure patterns and the maintenance associated with individual sites, wireless operators can also achieve huge savings. For example, an operator might know that a particular backhaul antenna has failed twice in the past six months and therefore choose to decommission and replace it, rather than order another repair – heading off the need for a future site visit to maintain clearly faulty infrastructure.

By enabling technicians to remedy problems more quickly, remote monitoring and control can even help operators to improve overall service quality. The early detection of impending problems before they become critical can have a substantial effect on reducing the quality problems that subscribers are able to perceive. In an increasingly competitive and crowded market, maintaining an excellent service level is essential to avoiding customer churn.

For the highest value sites, remote monitoring can even be used to implement additional security protocols, such as requiring the visual verification of personnel before remotely unlocking a door.

mounting public and governmental pressure to lower their carbon emissions.

Holistic network management While all of the areas discussed above can generate great savings for operators, the effective holistic management of network sites Reducing energy consumption is not easy to achieve. Operators must be able As energy costs continue to rise, operators to monitor high-value assets widely dispersed cannot ignore the need to maximise their across hundreds, or even thousands, of network power efficiency. The soaring temperatures in African countries makes effective base station sites to ensure ongoing network efficiency. cooling critical, but often a site temperature Clearly, implementing separate systems setting reduction of just one degree can create to manage antennas, dry contact alarms, temperature control, power management and significant savings in the power used to cool a host of other variables would not be possible. equipment over the long term. Additionally, In order to accomplish this in a practical way solar power is a viable alternative to diesel operators require a turnkey system designed to generators in many African countries. fully manage site equipment from one central Unfortunately, technicians often alter the temperature settings of network sites by many location, which can track alarms and equipment status, as well as configuration and maintenance. degrees to make it more comfortable to work.

Managing network sites in a consolidated This can create significant costs if the thermostat way will not only reduce software and hardware settings are not returned to normal when the technician leaves. If operators are able to monitor expenditure, but will also increase reliability, maintainability and efficiency while reducing the temperature of their sites and remotely the cost of training personnel, as it reduces adjust thermostat settings, such unnecessary the number of systems that staff must become drains on OPEX can be eliminated.

By utilising energy and fuel more efficiently, familiar with.

Given the huge investments made in telecoms operators can also greatly reduce the networks, it is essential that operators introduce environmental impact of their networks. For processes to streamline the management of example, every site visit expends fuel. The cost-saving activities wherever possible. In more trips taken, the more fuel burned – confronting these challenges, remote asset which translates to the more CO₂ produced.

By deploying remote control solutions across management and maintenance tracking are a network, the number of site visits required often overlooked weapons in an operator’s can be significantly reduced, thereby lowering arsenal – yet they may also be their most an operator’s overall carbon footprint. This is powerful ones. AT increasingly important given that organisations in every area of business are coming under

Issue 14 AFRICA TELECOMS 31

advertorial

Improving security Theft and vandalism continue to be a costly problem for operators in Africa, particularly those with networks supporting isolated base stations.

In many African countries the unreliability of the national electricity grid has meant that operators often rely on diesel generators to provide the primary power for network sites.

However, the unstable power supply has also raised the value of power generating equipment, increasing the incidence of generator, diesel and transformer theft. One telco in Nigeria is currently replacing five to ten generators a month due to theft. Mr. Ahmad Farroukh, former CEO of MTN Nigeria, has commented that “all MTN sites are manned by private security agencies, but thefts occur because thieves tend to be adequately armed with ammunition, guns [and] self-loading trucks”.

Other common targets of theft, and by no means limited to emerging markets, are the expensive copper coaxial feeder cables and other components connecting base station antennas. The soaring price of copper has made many elements of telecoms infrastructure ideal targets for thieves. For example, early this year Johannesburg’s Soccer City could not stage a match as it had no power due to such a theft.

One way for operators to efficiently reduce their losses from theft and vandalism is to implement remote monitoring solutions like IP cameras, motion detectors, generator fuel management and door access control systems. These systems can play as large a role in deterring crime as in criminal detention, apprehension and prosecution.

The silent

BY Lesley Stones

The future shape of m-banking is unpredictable even as it gains the status of a new industry.

revolution So far so good

There is a very simple reason why mobile banking is gaining ground in Africa: people have cellphones, not bank accounts.

So when money needs to be transferred or bills paid, the ability to use a cellphone instead of travelling with wads of cash or trusting the post is appealing.

That indisputable fact is encouraging operators to escalate their mobile banking facilities, fuelling the growth of m-banking across Africa.

Some of the figures are already impressive. MTN Uganda registered 890,000 users for its MobileMoney service within a year, with 16% of its subscribers signing up. In its inaugural year to March 2010 it moved $195 million in 11.8 million transactions.

More recent figures show it now has 1.5-million users and the system has been extended to pay bills for TV and water services. More than 2,500 service outlets in Uganda have moved a total of US$753 million, and 60% of those transfers were to recipients in unbanked rural areas.

One size can’t fit all

Yet m-banking can involve far more than someone simply sending money to a recipient who can collect the cash from a local agent.

The technologies are also flourishing in developed nations as people pay bills and transfer cash between accounts via a cellphone instead of visiting a physical branch or logging onto the internet.

That ability to satisfy both high-end and low-end customers means operators

32 AFRICA TELECOMS Issue 14

and banking institutions realise mobile money is far too valuable to ignore.

The operators gain loyalty and extra revenue as their customers transact, while the banks reach more people with fewer branches, enjoy cheaper running costs as customers switch to ‘self service’ channels, and potentially win new users.

Prepaid airtime top-up services have already introduced cellphone users to a basic form of electronic transaction, which has helped to make more sophisticated banking services seem less daunting. Yet the differing needs of different customers and the varying level of user and handset sophistication means one size can’t fit all. So a variety of initiatives and solutions are appearing in diverse countries.

Dare Okoudjou, the CEO of MFS Africa, warns against thinking that m-banking is an easy win. Operating a money transfer service is very tricky, he says. Although vast amounts of cash are now being moved across the airwaves, putting a good proposition together is difficult because there are so many players involved.

“A lot of people overlook the complexity of actually putting all these services together and making it simple so people want to use it,” he says.

“There’s the sender and an agent, the money transfer company and an agent to dispense the cash, so you have to align many people.”

Wow … but why?

The first five years of mobile money have been disappointing for many players,

Okoudjou believes, partly because regulations are too restrictive in some countries and partly because the market conditions and structures are not ready.

“You have to be in a market where money transfers resonate with people,” he says. “There is also a lack of compelling propositions. There’s the wow factor that I can do this – but why should I want to?”

MFS Africa enables m-banking services including bill payments, insurance services and international remittances. “We always start with what people actually want,” Okoudjou says.

“Don’t think a client or a mobile user wakes up in the morning and says ‘I feel I need a bank account’ or ‘I feel the need to pay someone.’

But they might want shoes and have to pay for them. So you have to give them a compelling reason to sign up. And having a mobile payment service or a mobile wallet is a bit of a weak proposition,” Okoudjou argues.

He predicts that bill payment companies will fuel the growth of m-money, because having a mobile wallet is only attractive if there are services you want to use it for.

“You can use m-money to collect insurance premiums, but that won’t grow the market. It just makes it more efficient.

Or you can look at ways to create new products that leverage the different attributes of a mobile wallet and reach millions rather than thousands of people.”

MFS Africa is shooting for millions of customers, not merely thousands, with its latest project to supply credit facilities to customers in Cameroon and Ghana.

“create new products that leverage the different attributes of a mobile wallet and reach millions rather than thousands of people.”

Issue 14 AFRICA TELECOMS 33

“I’d prefer not to talk about it too much at this stage but it will dramatically expand the market,” Okoudjou says.

The service should be launched in July, tapping into the potentially enormous pool of people needing ready cash.

Market in its infancy

One of the major players in m-money is Fundamo, which develops mobile banking and mobile wallet technologies.

CEO Hannes van Rensburg believes the market is in its infancy and still at an exploratory stage.

“There are a lot of challenges that not everyone understands, and as an industry we have to get better at it,” he says.

Van Rensburg doesn’t believe any one “killer application” will become the most successful model. The key is just to get more people banked, because the bigger the market the more viable it will be.

“If you sell a product to five people it’s not viable, but if you sell it to five million people it’s viable,” he says.

Latest estimates are that between 50 and 60 million people already use m-banking in one form or another. The GSMA predicts that mobile financial services will reach a massive 1.7 billion unbanked people in developing countries by 2012.

Growth is also expected in more developed nations as young and mobilesavvy subscribers demand greater convenience from their financial services providers.

Transformational banking

M-money falls into two basic categories.

One is additive banking, where a bank adds a mobile channel through which existing customers can access their accounts.

The second and more exciting type is transformational banking, which uses cellphones to reach people who are unbanked or underbanked.

Kenya is the leading country in Africa for transformational banking, Van Rensburg says, thanks to the hugely successful M-PESA service launched by

34 AFRICA TELECOMS Issue 14

Users are not getting a traditional bank account but a more useful ‘utility value store’ Safaricom.

In February, M-PESA won the Global Mobile Awards for the category of Mobile Money for the Unbanked. The partners in the operation are Safaricom, Vodacom, Vodafone Group, Vodafone Essar Limited and Roshan Ltd. The judges said M-PESA was “winning ground in a way seldom seen in the mobile industry and is a true and sustained success story”.

The solution had been enhanced in 2010 with the addition of new features and territories, and customer numbers had doubled to 20 million. It is now available in South Africa, Fiji and Qatar, and its customers transfer more than half a billion US$ per month.

The partners have also added a savings account linked to M-PESA, which saw 600,000 new bank accounts opened within four months.

M-PESA’s money transfer service is a fast, safe and easy way to transfer money from one cellphone to another. Users can register for free and create a personal PIN for security.

It was rolled out to South Africa by Vodacom and Nedbank last August, and costs the user just R2.45 to send money to another registered user. Already 2,500 outlets offer M-PESA in South

Africa, including Vodashops, PEP Stores and community phone shops, with the companies determined to establish many more.

The growth of M-PESA supports Van Rensburg’s belief that the big revolution is around transformational banking in emerging economies.

“In South Africa that market is more than one million, which isn’t trivial, although we have a relatively small banked community. It’s not like that in other parts of the world, where this silent revolution is seeing more and more people getting banked.”

Users are not getting a traditional bank account but a more useful ‘utility value store’, he says.

Consolidation the key

The most critical service that has to be in place is a cash-in, cash-out mechanism where the sender’s cash turns electronic, then reverts back into cash for the recipient to collect from an agent. If that basic mechanism is absent or unreliable, then the complex eco-system that involves operators, technology developers, banks, governments and regulators will never work. Nor can value added services be developed if that fundamental core technology is not supremely reliable.

“Mobile financial services need to work perfectly first time and every time. There is no room for error when consumer confidence is at risk,” Van Rensburg says.

Despite the vast potential, however, the need for economies of scale is already kicking in, and consolidation is occurring as some smaller players are taken over by larger platform providers.

Further and more rapid consolidation looks likely as competition to reach new markets heats up and older technologies are replaced in existing markets.

Smaller players lack the resources to research and design services for specific markets, but can gain that support from larger companies. In return, larger companies often need the technical

expertise and deep understanding of each individual market that smaller vendors have accrued.

Consolidation will also be fuelled by a lack of skills, since there are not enough real experts to support all the entities currently trying to develop or operate m-money services, Van Rensburg believes.

The greatest success will come through partnerships where banks provide the banking credibility and mobile operators distribute the service. This will create win-win business models that fuel more growth.

“For example, 10 banks could collaborate with one operator for a single mobile financial solution on one platform, boosting economies of scale and market share for a minimal investment,” Van Rensburg suggests.

Just a matter of time

Innovation and expansion in the market have been depressed for the past couple of years due to the global financial crisis, he says. That has reduced the amount of capital being invested in new companies, or in upgrading networks.

“This restraint on capital has made the establishment of mobile financial infrastructures extremely difficult as the funding needed to start new operations has been largely unavailable.”

However, mobile banking in Africa will boom again as more retailers explore the opportunities to get in on the act, such as supermarkets offering cash-in and cash-out services on mobile wallets.

As the market grows and matures, services are broadening beyond simply transferring money between two people, with offerings now including bill payments and insurance services.

“The biggest thing I like about mobile money is putting something into the market that provides financial services to people who haven’t had it before,” says Pieter Verkade, MTN’s Mobile Money executive.

“It’s like when we first introduced mobile telecommunications and brought

36 AFRICA TELECOMS Issue 14

basic telephony facilities to people who hadn’t had it before.”

M-money is still far from essential for operators to provide, but as competition intensifies it will prove a very attractive additional service to win customer loyalty, he says.

Oddly, perhaps, Verkade sees a big difference between consumer attitudes to m-money in East Africa compared to West Africa. “Some services in West Africa are not growing as quickly as they did in East Africa. It’s taking much longer,” he says.

“People are more aware of it in Kenya and there is communication with Uganda and Rwanda so it spills over. You need to trust the service before you start sending money through it, so maybe it’s more a question of time than whether it will work or not.”

Life insurance world first

MTN thinks bill payments and insurance services may prove more successful than money transfers in West Africa. So in March this year, MTN and Hollard Insurance began offering subscribers in Ghana the option of paying for life insurance through their phone. The two companies say their mi-Life scheme is the world’s first mobile money insurance service.

MTN has nine million subscribers in Ghana, of which two million have joined its mobile banking service since it launched in 2009.

Users with a mobile money account can buy a mi-Life insurance policy using the menus on their phones. Then they can pay premiums of as little as one cedi ($0.65) a month via their handset, as well as initiate claims or queries.

More Ghanaians already have m-money accounts than have bank accounts, said Jeremy Leach, a divisional director of Hollard.

“The opportunity to partner with MTN to develop m-insurance is one of the most exciting initiatives Hollard has been involved in and will transform insurance in the emerging markets,” he says.

MTN is equally bullish, even though the service is still in a trial phase.

“Buying insurance through your phone is yet another example of the possibilities with MTN Mobile Money,” says Verkade. “Through our extensive distribution network, we are able to reach many customers with this important product.” MTN sees a healthy demand for such services in West Africa and is planning to expand its services to meet the need, he says.

Into the future

Okoudjou likens the m-money market of today to the internet in the late 90s.

“We knew it was going to fundamentally change the way business is conducted and financial services in particular, but no one could tell which kind of model and which players would succeed,” he says.

“We have come a long way in the last five years and can now talk about mobile money as an industry, but there are still a lot of unknowns in how it will eventually play out, how the value will be generated and who can capture it.” AT

“We knew it was going to fundamentally change the way business is conducted and financial services in particular “

africa telecom stats The purpose of this page is to give readers of Africa Telecoms a brief overview as to the growth and statistics related to the Telecoms and ICT markets in Africa. What we will be doing on an annual basis is relooking at the statistics, this way over time Africa Telecoms will have a basis for tracking developments and growth in the Africa Market. Each Edition of Africa Telecoms will be focused on a specific area. This month we are focusing on the East African Region and Mobile Banking, to this end we have

tried to include a range of Backhaul related statistics relevant to the African Market 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

East Africa Connections 2007-2015

Wireless Intelligence

60%

180 160

50%

MILLIONS

140 40%

120 100

30%

80 20%

60 40

10%

20 0

2007

2008

2009

2010

CONNECTIONS

2011

2012

2013

2014

0%

2015

YEAR-ON-YEAR GROWTH

top 10 semiconductor vendors by revenue estimates, 2010 (millions US$) 2010 Rank 2009 Rank 1 2 3 4 5 6 7 8 9 10

1 2 3 4 5 11 7 13 6 12

Vendor Intel Samsung Electronics Toshiba Texas Instruments STMicroelectronics Renesas Electronics Hynix Semiconductor Micron Technology Qualcomm Broadcom OTHERS TOTAL MARKET

38 AFRICA TELECOMS Issue 14

2009 Revenue 33,429 17,749 9,604 9,142 8,460 4,542 6,035 4,170 6,409 4,317

124,815 228,672

2010 Revenue 2009-2010 Growth (%) 41,988 28,097 12,360 11,878 10,346 10,204 9,884 8,224 7,204 6,604

25.6 58.3 28.7 29.9 22.3 124.7 63.8 97.2 12.4 53.0

152,574 299,363

22.2 30.9

Gartner (April 2011)

2010 Market Share (%) 14.0 9.4 4.1 4.0 3.5 3.4 3.3 2.7 2.4 2.2

51.0 100.0

africa telecom stats mobile money deployments, africa 2007-2011

60

GSMA

50

TOTAL NFC TICKETING AND RETAIL PAYMENTS TRANSACTION VALUE P.A. (%). SPLIT BY 8 KEY REGIONS 2011 & 2016 Juniper Research 100%

40 80%

30

60%

20 10

40%

0

2007

2008

2009

2010

2011

undersea cable market: bandwidth growth (tanzania), 2008-2012

0%

Frost & Sullivan

6000 5000

bandwidth (gbps)

20%

2011

2016

NORTH AMERICA

CENTRAL & EASTERN EUROPE

WESTERN EUROPE

REST OF ASIA PACIFIC

4000

FAR EAST & CHINA

AFRICA & MIDDLE EAST

3000

LATIN AMERICA

INDIAN SUB-CONTINENT

2000

NFC SMARTPHONES (%) SPLIT BY 8 REGIONS 2014

1000 0

Juniper Research

2008

2009

2010

2011

2012

undersea cable market: bandwidth growth (kenya), 2008-2012 Frost & Sullivan

bandwidth (gbps)

10000 8000 6000 4000 2000 0

2008

2009

2010

2011

NORTH AMERICA

CENTRAL & EASTERN EUROPE

WESTERN EUROPE

REST OF ASIA PACIFIC

FAR EAST & CHINA

AFRICA & MIDDLE EAST

LATIN AMERICA

INDIAN SUB-CONTINENT

2012 Issue 14 AFRICA TELECOMS 39

By Michael Flanagan, Chief Technology OfficeR, Arieso

Smartphones

i n

A f r i c A :

Expected Data Demands and Customer-Centric Responses

Data subscriber demands in Africa are presaged by highly publicized smartphone usage in Europe and North America. The latest smartphone launches have been found to herald a new breed of data subscriber with an increasingly voracious appetite for data. Recent industry reports also show signs of an imminent data explosion in Africa; non-voice revenues in Africa are expected to grow to 20% of all mobile services revenue from their present low single-digit levels (Telecoms.com, 10 Nov 2010). Further, the penetration of smartphones in Africa is predicted to nearly triple by 2015 (Informa Telecoms, 4 Nov 2010).

To cope with these increased demands in a cost-effective manner, African operators will need to learn lessons from other market operators where smartphone penetration rates have been historically higher. For example, different devices exhibit different per-subscriber demands on the network in a manner that varies from location to location. To surgically respond in a timely manner, it is necessary to use subscriber-centric data in order to determine exactly where the subscriber data demands are.

Recent Smartphone Launches: What they Mean to Africa The demands of current smartphone subscribers are formidable and well known in the industry, especially with regards to iPhone 3G data volumes and numbers of data calls.

However, the introduction on recent smartphones of new data-intense features (such as HD video, 5-Megapixel cameras, and multitasking to increase user efficiency on the iPhone 4), raises the expectation that the users of these new smartphones will be even more intense data consumers. A recent Arieso whitepaper studied this phenomenon and the comparative results for smartphones popular in Africa are summarized in Figure 1.

40 AFRICA TELECOMS Issue 14

Issue 14 AFRICA TELECOMS 41 45

Figure 1: Comparative Results by device the table shows a staggering 26-to-34 times increase in the data volume per 3G modem subscriber over the iPhone 3G reference.

Device

release date

Data moU/sub

Data calls/sub

iPhone 3G iPhone 4G Blackberry 9000 Blackberry 9500 Blackberry 9700 HTC Magic HTC Google Nexus One HTC Desire Nokia E71 Nokia E72 Nokia N900 Sony Ericsson Xperia Samsung Galaxy 3G Modems iPad

Jun ‘08 Jun ‘10 May ‘08 Nov ‘08 Nov ‘09 May ‘09 Jan’10 Mar ‘10 Jul ‘08 Jun ‘09 Nov ‘09 Mar ‘10 Jun ‘10 (various) Apr ‘10

100% 167% 55% 81% 101% 163% 194% 128% 27% 64% 20% 351% 283% 377% 125%

100% 144% 59% 61% 69% 212% 234% 135% 12% 40% 8% 95% 150% 11% 96%

While the results in Figure 1 are specific to the original Arieso study, they can be considered as illustrative of the types of results that African operators could expect.

Total data call time per subscriber increased by up to 250%

The average Sony Ericsson Xperia subscriber was connected to the network in data calls 3.5 times more than the average iPhone 3G subscriber as evidenced by the Data Minutes of Use (MoU) per subscriber column. This corresponds to increased consumption of network resources by the average Xperia subscriber and needs to be taken into account in network planning and network optimization activities (especially if the rates of purchase of Xperia devices are forecasted to increase). In a more general example, the network impact of an arbitrary mix of network devices can be similarly estimated.

Downlink data volumes per subscriber increased by up to 40%

The iPhone 4 and the HTC Desire both showed an increase of 40% in downlink data volumes over the iPhone 3G. Since the downlink-to-uplink data volume ratio was in excess of 7-to-1 on average for the smartphones under study, this downlink increase of 40% corresponds to a larger total volume of data than a 130% uplink increase (discussed in the last section).

42 AFRICA TELECOMS Issue 14

It remains a topic for further study to characterize the root cause of this downlink data volume increase. But regardless of the cause, quantifying this increase is still important for purposes of network planning and optimization (including forecast trending).

Is the iPad a big smartphone or a small PC?

The 3G modems in a network are generally noteworthy for their remarkably high volumes of data per subscriber. MTN has recently indicated that over 3,000 mobile broadband-enabled laptops are being sold every month in MTN-branded stores (Telecoms.com, 10 November 2010).

The net effect is that the aggregate data volume across all 3G modems can be competitive with (and sometimes in excess of) the aggregate data volume across all smartphones. Figure 1 shows a staggering 26-to-34 times increase in the data volume per 3G modem subscriber over the iPhone 3G reference. This is achieved by making nearly one-tenth the number of data calls and only a 2.8-fold increase in the total data call time.

In contrast, the iPads reveal persubscriber scores in Figure 1 that are almost always in the range of the smartphone scores for each category.

The only exception is the uplink data volume which shows a 220% increase

ul Data Volume dl Data Volume (kbits/sub) (kbits/sub) Voice calls/sub 100% 145% 11% 19% 21% 84% 170% 136% 21% 57% 18% 144% 226% 3537% 322%

100% 141% 11% 24% 25% 89% 137% 141% 15% 24% 12% 138% 122% 2676% 137%

100% 93% 73% 107% 98% 68% 61% 70% 134% 136% 138% 113% 82% 0% 0%

over the iPhone 3G (the most aggressive smartphone reveals a 120% increase), but this is still more than an order of magnitude less than the corresponding 3G modem increase.

Based on this analysis, the iPad appears to have much more in common with smartphones than with 3G modems from a network demand perspective.

Network operator response overview How does the network operator best respond to these increasing data demands?

It is well known that network capacity is best placed at the centre of the demand.

This minimizes the distance from cell-sites to subscribers, which in turn reduces the RF pathloss, reduces the requisite transmit powers and maximizes throughput, overall capacity and network efficiency.

There are today a number of solutions which offer network operators the opportunity to quickly put network capacity in the right place, including:

African network operators will soon need to respond to datahungry smartphone and 3G modem subscribers in a timely and cost-effective manner.

•

•

•

Femtocells: Femtocells are now available commercially from a number of Tier-1 operators.

They are essentially a home base-station with a very limited footprint, designed for in-building enhancement. Femtocells use a fixed broadband infrastructure to provide backhaul to the core network.

Micro/pico cells: Micro and pico cells are deployed by the operator for traffic offload. Microcells are typically low-powered units, mounted at street level to provide coverage over a 200-300m radius.

Both solutions are aimed at very localized offload – but in an outdoor environment (in contrast to the femtocell).

In-building solutions: In-building solutions have traditionally been deployed in large conference centres, in airports and in similar locations. In this case, the inbuilding solution can be quite well isolated from the macro network but again aims to provide a highly localized, high-capacity solution.

The solutions described above offer a number of benefits, not least that they typically are less time consuming to deploy than a new macro network site (which can take more than two years to pass through planning and construction). As previously noted, they are also more effective at serving localized traffic than a macro

network site due to their proximity to where the traffic is actually located.

Picking the best locations

It has been observed that these localized solutions are best and most cost effective when they are located exactly where the traffic demand is highest. However, if an in-building solution is deployed in the wrong building, or a microcell is located on the wrong street corner, this could become an expensive mistake.

Using traditional techniques, most mobile operators will not be able to pinpoint traffic locations with sufficient accuracy to make sure that they get the best return on their infrastructure investment.

Traditional techniques are reliant on the experience of a local engineering team, including their estimation of where traffic is likely to be located within a cell footprint. But these approaches suffer from the inability to objectively quantify the relative importance of one building over another, both within a particular corporate or commercial area, as well as spanning the entire cell footprint.

The selection of the most appropriate locations is greatly helped by the use of a location-aware and subscribercentric solution. Continual, 24x7 analysis of every call (including device types, data volumes and coverage-related measurements) can provide network operations with the locations of traffic hotspots to building-level accuracy. This is

critically important due to the intense demand that the new breed of data user will place on the network.

Arieso’s ariesoGEO product has been recently used to determine the best locations for microcells and inbuilding solutions.

Summary

African network operators will soon need to respond to data-hungry smartphone and 3G modem subscribers in a timely and cost-effective manner. Subscribers using the latest smartphones have been studied and shown to reveal important differences that need to be accounted for in network planning and optimization.

The use of customer-centric and location-aware solutions allows a network operator to provide superior data calling experiences and to minimize customer churn through the surgical introduction of new network equipment. AT

Issue 14 AFRICA TELECOMS 43

“For us, the launch of Orange Money in Kenya today brings with it very exciting prospects for our customers as it denotes the introduction of a money transfer service that has been expressly designed to address and exceed all the areas that the consumers need in a mobile money transfer service”

By Zachary Ochieng

T

he Kenyan ICT sector is bubbling with growth, following its liberalization in 1998 through the Kenya Communications Act (KCA), which repealed the monolithic Kenya Posts &Telecommunications Corporation and split it into five separate entities, including Telkom Kenya – the fixed line operator; the Postal Corporation

44 AFRICA TELECOMS Issue 14

of Kenya; and the Communications Commission of Kenya – the industry regulator. KCA also created the National Communications Secretariat and an Appeals Tribunal for the purposes of arbitration in cases where disputes arise between parties under the KCA. Since then, the sector, notably the telecoms market segment, has witnessed

a robust growth, thanks to competition introduced by the industry regulator. The World Bank, in its latest country report, Kenya at the Tipping Point, projects the economy to grow at six percent next year, riding on the back of a robust telecommunications revolution.

But it is the consumers who have been the ultimate beneficiaries as operators come up with innovative products to stay ahead of the game. One such product which has taken the market by storm is the mobile money transfer service.

Safaricom, the listed integrated service and leading mobile provider, was the first to introduce such a service in the form of M-Pesa in 2007. It has revolutionised money transfer services in the country by providing Safaricom subscribers with a fast, affordable way to transfer money by phone. Besides person to person transfers, customers can now pay bills and receive small value payments like benefits and salaries from businesses. M-Pesa is a joint venture between Safaricom and Vodafone, the British cellular giant. Safaricom is currently the market leader with 13.5 million subscribers on its M-Pesa platform, with 22,000 M-Pesa agents. Last year, M-Pesa, as well as short message service (sms) and data, accounted for 18.7 percent of the company’s total revenue.

However, this did not come easily.

When M-Pesa was launched, banks went on the warpath, accusing Safaricom of invading their business turf. But as time went by, banks realised the importance of partnering with the telecom operators to roll out mobile banking products. It is this partnership that has enabled the three other mobile operators to introduce mobile money transfer services. Airtel Kenya, the second largest mobile operator, offers Airtel Money; while Telkom Kenya, the third largest mobile operator, has a product known as Orange Money (or Iko Pesa – Kiswahili for “there is money”). Essar Telecoms Kenya, the latest entrant in the market, has a brand known as Yu cash. However, it is Orange Money, launched last year, that has caused ripples in the market. A partnership

between Telkom Kenya and Equity Bank, Kenya’s fastest growing commercial bank, Orange Money introduces features that combine both money transfer and mobile banking.

Essentially, it means that customers have access to their money 24 hours a day, seven days a week. But above all, this partnership is laudable as it goes a long way towards reaching the unbanked population, especially those residing in rural areas, where banking services are few and far between. Consequently, the majority of the population residing there has been locked out of traditional banking services, due to the long distance one needs to travel to a bank and the cost of transport. Also, bank charges remain exorbitant and way beyond the reach of most ordinary Kenyans.

“The advent of mobile money transfer solutions in the market has seen an increase in the number of people who can access financial services, leading to inclusivity. Orange Money is therefore a welcome innovation, as it will give Orange and Equity Bank customers more conveniences as they run their bank accounts from their handsets”, says Uhuru

Kenyatta, Deputy Prime Minister and Minister for Finance.

What makes Orange Money popular is that a customer spends only Ksh20 (US$0.25) to withdraw money from an account, while making deposits is free. Customers are also able to apply for loans directly using their phones, without necessarily visiting banks to fill in loan application forms and securing guarantors. Orange Money has also reduced tensions between banks and telecoms, operating as it does on a win-win-basis, given that its platform is embedded with banking software that allows swift transfers directly from the phone, thereby reducing congestion in the banking halls.

As competition for the mobile money segment rages, it is Safaricom that is likely to be the biggest loser. Besides offering a password-enabled platform where customers can log in and send money real time, Orange Money allows for phone book look up, thereby eliminating the possibility of sending money to the wrong person, a common weakness with the M-Pesa platform.

Despite frequent system upgrades, the

A partnership between Telkom Kenya and Equity Bank, Kenya’s fastest growing commercial bank, Orange Money introduces features that combine both money transfer and mobile banking.

Issue 14 AFRICA TELECOMS 45

M-Pesa platform does not allow users to go directly to the phone book when sending money. Consequently, M-Pesa users continue to lose money after sending it to wrong numbers, most of whom never want to return it to the sender. That said, the launch of Orange Money and the competition it poses could perhaps be the new Safaricom CEO Bob Collymore’s first baptism of fire, as he continues to shoulder blame over frequent breakdown of the M-Pesa and other platforms.

But as this happens, Telkom Kenya is smiling all the way to the bank.

“For us, the launch of Orange Money in Kenya today brings with it very exciting prospects for our customers as it denotes the introduction of a money transfer service that has been expressly designed to address and exceed all the areas that the consumers need in a mobile money transfer service,” Telkom Kenya CEO Mickael Ghossein said during the launch. “Our partnership is a meeting of great brands. Equity Bank has the highest number of bank accounts in Kenya and is represented throughout the country. Our network on the other hand is reliable, fast and covers all corners of Kenya and beyond.”

It is not only the mobile money transfer segment that has witnessed competition

“We don’t want Internet costs to be prohibitive. We want them to be affordable, especially to students.

This is part of our investment plan” 46 AFRICA TELECOMS Issue 14

in the recent past. The voice segment has been a major battlefield, with gloves coming off as soon as India’s Bharti Airtel acquired Zain’s 16 operations in Africa in July last year. Riding on the back of its acquisition by Bharti Airtel and the lowering of the interconnect charges by CCK, Zain Kenya (now Airtel Kenya) ignited a major price war that saw its competitors scampering for shock absorbers. In its quest to gain substantial market share and edge out Safaricom, whose call charges have been a subject of debate by the consumers, and CCK, the industry regulator, Airtel Kenya slashed its cross network call charges by more than half from Ksh8 (US$0.1) to Ksh3 (US$0.0375) per minute for both pre-paid and post-paid subscribers.

Airtel Kenya CEO Rene Meza says the reduction in call charges is part of Bharti Airtel’s strategy to target the low income segments of the population. He says that following the conclusion of the acquisition deal by Bharti, the company started a new journey: a new business model which is about investing in the mass market and allowing people to be able to afford basic communication services. It is not lost on observers that after the acquisition, Bharti became the

fifth largest mobile operator in the world, resulting in tremendous economies of scale and the ability of the company to reduce its cost structure.

“We are talking about a company with 180 million customers today. We are talking about a company that has built over 150,000 towers. That brings the whole cost structure of the company down by over 60-70 percent. This allows us to provide our customers with much more affordable products and services”, says Meza. “This is all about economies of scale. We want to reach the lower end of the market segment which has hitherto been neglected by our competitors. In the short run, we may not make money but the returns will definitely come in the long run.”

In July 2010, Bharti Airtel unveiled its strategy for Kenya and promised to increase its current market share of 10 percent and dislodge Safaricom as the dominant operator. This, however, appears to be a tall order considering that Airtel Kenya (then known as Kencell) entered the market before Safaricom but was soon overtaken by the latter following the introduction of innovative products, such as M-Pesa, that helped it retain customers on its network. It remains to be seen whether Airtel will now change this position.

Meza says the current price cuts are a permanent feature and not a short term offer, and that consumers should expect more in the coming months.

Without giving figures, Meza says Airtel Kenya has recorded a massive growth in subscriber base within months of reducing its tariffs.

Again, it is Safaricom, Airtel’s greatest challenger, that has borne the heaviest brunt of the price wars, with traffic to its network dropping by two percentage points within the first week of Airtel’s reducing its call charges (both on-net and off-net) as well as sms charges. Caught off guard, then Safaricom CEO Michael Joseph had no option but to offer similar call rates in a month-long offer, hoping that Airtel would soon revert to its original tariffs. But that was not to be.

Boxed into a corner, Joseph cried foul, arguing that Safaricom was not ready to engage in dirty price wars, being the sole listed mobile operator.

“We have shareholders waiting for dividends and therefore will not be engaging in uneconomically beneficial price wars with competitors,” he told this writer in an interview. But his successor Bob Collymore appealed for government intervention, arguing that the low call rates will affect the economy as most operators are likely to resort to retrenchment of workers. Kenyan Prime Minister Raila Odinga promised to look into the matter.

What cannot be gainsaid is the fact that the price war has forced the mobile operators to offer practically free calls as they struggle to remain afloat.

That notwithstanding, it is now clear that with the war in the voice market reaching fever pitch, the next battle frontier will be in the data market, where Airtel says it will not waver. Already the company has partnered with Kenya Data Networks (KDN), a leading telecommunications infrastructure provider, to upgrade its transmission network in readiness for the launch of its third generation 3G HSPA network.

According to Meza, the upgraded 3G

service is expected to enhance mobile Internet speeds and coverage for its customers.

“Ours will be a world-class 3G network. We are going to offer extremely affordable data services to our consumers, even better than the affordable rates we are offering currently. We don’t want Internet costs to be prohibitive. We want them to be affordable, especially to students. This is part of our investment plan”, say Meza.

Airtel is also partnering with the government on digital villages and various programmes to make laptops affordable. The money transfer service, Airtel Money, is also being revamped, with the company having invested US$3 million in the recruitment of more agents. “We believe mobile commerce is a reality in the whole of Africa and Airtel wants to conduct it in an aggressive way,” says Meza.

In terms of revenues, Safaricom is the biggest data provider, followed closely by Telkom Kenya (Orange). Last year, Safaricom earned Ksh3 billion (US$37.5 million) from broadband data sales. According to a recent Renaissance Capital forecast, Safaricom’s profits over the next three years will hit the Ksh35 billion mark (US$437.5 million), mostly buoyed by continued growth of the firm’s data business.

It is worth noting that the mobile operators have different bundle offers for their customers, making it difficult to compare their charges. But Airtel and Orange have the lowest retail bundles of 100MB, compared to Safaricom’s 700MB. “We still have the most competitive pricing in the data market and consumers are not looking at reduction in prices more than customer experience, which is the key driver for the data business,” says Angela Ng’ang’a-Mumo, Head of Corporate Communications, Telkom Kenya.

No doubt, competition in this market

“We are not seeing aggressive rollout of 3G that is critical to our last mile broadband,” says Ndemo. segment is also set to go a notch higher following the lowering of the 3G spectrum fee from US$25 million to US$10 million. Up to last year, only Safaricom had the 3G network. As the competition for the data market rages, analysts predict the death of cybercafés as more people now access the Internet through their mobile phones and laptops. However, Information and Communications Permanent Secretary Dr Bitange Ndemo argues that while cybercafés may die in the Central Business District of Nairobi, they still remain relevant in low income neighbourhoods and in rural centres where most people have no mobile phones or laptops.

“We are not seeing aggressive rollout of 3G that is critical to our last mile broadband,” says Ndemo. AT

Issue 14 AFRICA TELECOMS 47

EVENTS CALENDAR april 05-06 east africa com

Nairobi, Kenya Caroline Wiezien +44 (0)20 7017 5605 Informa Telecoms & Media www.comworldseries.com

27-28 africa CDMA summit

Lagos, NIGERIA Michele Murry: +27 11 603 1900 Qualcomm www.cdg.org/africa_summit2011

may 04-05 African Outsourcing Summit 2011 Nairobi, Kenya Rumana Bukht: +44 208 600 3800 C.T.O www.cto.int

23-27 Management World 2011 Nice, France Jamie Rudolph: +1 973-944-5100 TM Forum www.tmforum.org

30-02 satcom 2011 africa

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

june 01-02 apps world africa

Michael Panes: 01179 468870 www.apps-world.net/africa/

08-09 aitec banking & mobile money west africa Accra, GHANA Helen Moroney: +44 148 088 0774 AITEC Africa www.aitecafrica.com

15-16 West & Central Africa Com Dakar, Senegal Caroline Wiezien +44 (0)20 7017 5605 Informa Telecoms & Media www.comworldseries.com

27-30 telecoms world africa 2011 Cape Town, South Africa Tatum Willis: +27 11 516 4059 Terrapin 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 48 AFRICA TELECOMS Issue 14

july 05-06 VAS Africa

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

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

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

13-14 africa communications & satellite summit Nairobi, KENYA Claire Garrett: +27 (0) 87 820 7106 www.acssummit.com

20-21 Management World Africa 2011 Johannesburg, South Africa Jamie Rudolph: +1 973-944-5100 TM Forum www.tmforum.org

APRIL 2011 - FEBRUARY 2012 25-28 Submarine Networks World Africa 2011 Johannesburg, South Africa Tatum Willis: +27 11 516 4059 Terrapinn www.terrapinn.com/2011

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

20-21 nigeria com

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

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

october

02-03

11-12

The internet show africa 2011

north africa com

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

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

24-26

12-13

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

september 13-15 NGT africa summit

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

AItec mozambique ict congress 2011

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

november 09-10 africa com

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

16-17 AFRIHEALTH

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

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

february

24-27

7TH Annual Digital Broadcasting Switchover Forum 2012

itu telecom world

www.itu.int/WORLD2011/ ITU Ledia Ariza: +41 22 730 52 07 www.itu.int/world2011

07-09

Johannesburg, South Africa Rumana Bukht: +44 208 600 3800 C.T.O www.cto.int

Issue 14 AFRICA TELECOMS 49

50 AFRICA TELECOMS Issue 14

Reg Swart, Senior Vice President Fundamo Africa and Middle East, highlights the juxtaposition of evolutionary and revolutionary factors that will make 2011 a pivotal year for mobile financial services in Africa.

Once in a lifetime

opportunity

unbanked populations where the majority In 2001 Celpay launched Africa’s first already own a mobile phone. The winners mobile financial services (MFS) offering, of this race will be the ones that best powered by Fundamo. Ten years on and apply the insights and lessons garnered Africa leads the global MFS market with from delivering MFS so far.

A juxtaposition of evolutionary steps high profile services such as MTN Uganda’s and revolutionary leaps will make 2011 a MobileMoney and Safaricom’s M-Pesa pivotal year for the MFS market in Africa, experiencing phenomenal growth. By with consequences for the whole industry.

2015 mobile money transfers in Africa are The following factors will decide the forecast to exceed US$200 billion, almost direction of the market.

8% of Africa’s nominal GDP. This is a huge opportunity, even before taking into account Standardisation will create a bigger the potential contribution from new mobile and more diverse market The success of the Global System for money services such as credit and insurance. Mobile Communications (GSM) standard was in allowing subscribers to call and text any other mobile phone in the world, regardless of network or handset. To Over the past ten years the market has create a large and diverse MFS market, steadily evolved in terms of technical standards and business models, with early interoperability standards need to be market leaders establishing themselves. Set agreed on and implemented to allow against these evolutionary steps, a number cross-scheme transactions and enable economies of scale. Some efforts have of revolutionary leaps are in motion. been made by industry bodies such Subscribers who were previously as the GSM Association, but no single excluded from the banking world have become comfortable with mobile financial standard has been widely adopted.

Service providers need to interconnect services. Many are now beginning to between technology platforms to enable warm to more sophisticated financial products like insurance and credit, as well interoperability and unlock the network effect that has been so prevalent with as specific enterprise and retail services, simple SMS usage. There are some which will radically alter the dynamics of isolated steps towards this with vendors the market. such as Fundamo enabling remittance Untapped markets such as Nigeria and Egypt will become decisive battlegrounds links between Vodafone Qatar and SMART in the Philippines. However, for as market leaders strive to bank largely

The stage is set

interconnectivity a connection needs to be made between scheme operators in a specific country.

Once established, interconnect fees will provide a significant source of revenue, in addition to existing transaction fees.

This will drastically alter business models as players move from a ‘money transfer’ model to a ‘switch’ model.

The result will be a market that will increase ubiquity and access to new and innovative services from providers attracted by economies of scale. This model will put significant pressure on financial institutions and traditional payment providers who just cannot emulate the reach, ubiquity and low cost of operation. Service providers will be able to offer quick, cheap and reliable money transfer and payment superhighways, both within a country and across the region, to financial service providers and retailers looking to access previously unbanked African populations.

The knock out stages

Mobile operators have stolen a march on banks. Banks tend to act as suppliers to mobile operators rather than partners.

Ultimately, mobile operators engage with banks for the relevant banking credentials.

Today, banks have very little involvement in the running of MFS. In Ghana, for example, MTN is working with several different banks to provide various credentials: which illustrates the

Issue 14 AFRICA TELECOMS 51

Transformational services

With millions of subscribers signed up to MFS, increased confidence and the need

“

for interscheme differentiation, demand is being created for more advanced services than just the traditional person to person money transfer product.

Established financial service providers insurers and credit providers - will be able to gain access to a lucrative market and deploy services easily by working with a few key market players. The market in developing countries for mobile insurance alone is estimated to be between 1.5 and three billion policies (Lloyds, 2009).

‘Closed-loop’ services from retailers in conjunction with a service provider will gain significant momentum in 2011.

These services allow consumers to pay for goods remotely using existing agent networks, eliminating the need to carry cash long distances. With the availability of stickers that enable Near Field Communication (NFC) technology on any mobile phone, there is even the potential to use the existing MFS platforms to enable point of sale payments.

Key market battles

There are huge untapped markets in the region that are ripe for MFS, including Nigeria and Egypt. In these markets the majority of people are unbanked but own a mobile phone.

It has been speculated by many that 2011 could be the year that MFS really

“

‘supplier’ rather than ‘partner’ relationship now commonplace across Africa.

However, economic downturn and the technical, regulatory and risk concerns surrounding MFS schemes have begun to dissipate. Several large African banks are now looking to set up bank-led services in 2011 in parallel with their traditional core bank services to compete with the mobile money schemes offered by the mobile operators.

While MFS is showing huge promise in Kenya, Uganda and Rwanda, it is by no means a saturated market. More than 70% of the African population is either unbanked or underbanked (World Bank: 2009), representing a compelling opportunity for banks. As the recession abates, banks now have the CAPEX to invest in setting up services that they didn’t have a few years ago.

Banks also have expertise in educating consumers on the use of new services as well as experience in delivering financial services in rural areas. This expertise can give them an advantage over mobile operator-led services. We expect a sharp increase in competition between the two groups in 2011.

There are millions of people either unbanked or underbanked with millions more demanding the next wave of new financial services.

52 AFRICA TELECOMS Issue 14

takes off in Nigeria. Nigeria has a massive population of 160 million with a very small percentage currently able to access financial services. In contrast just over 50% of the population has access to a mobile phone, with 85 million connections (GSMA, February 2011).

In Nigeria the existing infrastructure is unreliable and the mobile phone will be a critical agent of change.

The Central Bank of Nigeria has 16 licences allocated for MFS deployments and it looks as if it’s going to be a tight race to grab the market.

The winners will be the service providers that get it right first time and even then only a few will survive in such a competitive environment. The business model and the technology that prove successful will provide valuable insights into how to tackle a market of this magnitude.

Conversely, if there is a big failure such as a system down or widespread fraud, it will be under the watchful eyes of the entire industry and the ramifications will be enormous.

2011 will decide the future of MFS

Despite the rapid growth of the MFS market, there is still all to play for. There are millions of people either unbanked or underbanked, with millions more demanding the next wave of new financial services. In 2011, market conditions present a once in a lifetime opportunity for market players.

The year falls upon an intersection between evolving standards and market forces as well as revolutionary leaps in terms of service provision and market battles. Those who best circumnavigate these different factors will emerge as winners in a year that will decide the course of the mobile financial services industry in Africa and beyond. AT

with Jeremy Leach, Divisional Director and Head of MicroInsurance, Hollard Insurance In this Issue of Africa Telecoms, we are looking at East Africa and mobile banking. Hollard recently announced a joint venture with MTN called mi-Life in Ghana. Can you tell us a little more about the product?

mi-Life is a life insurance product that has been specifically designed for the MTN mobile money platform. It is a holistic solution that allows the subscriber to buy the product from MTN merchants and service centres and also through one’s mobile menu; pay for the premium through Mobile Money; and manage the levels of cover subscribers want. Premiums vary from 1 cedis (US$ 0.65) for 500 cedis cover (US$ 331) to 5 cedis (US$ 3.31) for a cover of 2,000 cedis (US$ 1,327).

Whilst there is a range of other m-insurance initiatives, this is the first of its kind in that it leverages off both the distribution and collection mechanisms of MTN Mobile Money. What is particularly exciting is that it addresses the unique challenges of Ghana. As only 34% of the population is banked and 22% insured (FinScope 2010), the combination of mobile money and insurance should dramatically push back the frontier of access.

The platform was created by MFS Africa, whose CEO Dare Okoudjou, we ran a Q&A with last year. Can you tell us about this partnership and the platform itself?

Hollard and MFS Africa have an international partnership focused around m-insurance for mobile money operators, where MFS provides the mobile money know-how and technology (in the form of their MFS-Box) to support the deployment of insurance. Hollard addresses all the insurance requirements in terms of product development, pricing and the regulatory issues. Hollard believes firmly in partnerships

54 AFRICA TELECOMS Issue 14

and backs specialists such as MFS Africa in pursuit of providing value to our consumers and partners.

How does this platform interact with that from Fundamo that runs their existing m-banking platform?

MFS-Box acts as a bridge between mobile wallet platforms (eg Fundamo) and the information system of financial institutions (eg insurance). It enables the policy to be populated automatically using data from the m-banking platform or the automatic renewal of a policy after a premium has been successfully collected from a client’s mobile wallet.

This allowed us to have an almost seamless rollout of mi-Life as we were able to deploy the MFS Box with minimal distraction to MTN, which is a key comparative advantage.

Can you walk us through the decision to choose Ghana as a country in which to launch an m-banking insurance product?

The focus on Ghana came about for differing reasons and as a result of discussions with the MTN Group. At a high level, it is a country with high growth prospects, an enabling business environment and a supportive regulatory environment for insurers, which is extremely important.

Furthermore, in discussion with MTN, we found that MTN was a well-respected brand and the largest mobile operator in the country with nine million subscribers, and that it had rolled out almost two million mobile money accounts. And lastly but not least, MTN has a dedicated country team who were keen to roll out mi-Life. We were

also fortunate that our administration partners, MicroEnsure (a specialist international microinsurance administrator), and MFS Africa were also present in the country.

the family can be devastated without life or funeral cover to meet the funeral expenses or provide some cash flow to tide them over till they can find an alternative income source.

Is the partnership with MTN a group wide agreement or currently with MTN Ghana only? If group wide, what is the expected rollout time frame for mi-Life to be offered to MTN’s other properties across Africa?

Considering that life insurance is a recurring paymentbased product, how is this handled in the mobile banking arena? Does the premium come off an existing bank account or a mobile banking wallet?

Hollard and MTN have a group wide agreement so Ghana is the first of many. However, we will of course want to watch the pilot first before we make a decision about the next country, although we hope it is soon! But I would watch this space over the next six months.

Security is generally a question that is brought up fairly early on when looking at new m-banking products. Both from the perspective of activating a policy and then from claiming the benefits for the policy, can you give us some insight into the security procedures currently in place?

The MFS / Fundamo platform ensures very strong security features similar to a full banking experience. The old banking security adage of “what you have and what you know” resonates here – the client has a cell phone and a unique PIN number known only to themselves. So, in theory, it is safer than having a debit card as you don’t need to go to an ATM; and you can manage payments and buy the policy from the safety of your own home.

mi-Life is a life insurance product. Does Hollard foresee other insurance products being offered via mobile in the future? And if so, what type of products and when can the product portfolio expansion be expected? mi-Life is the first of many products we plan to roll out with MTN Mobile Money. Whilst we would expect to offer more complex products, we are also planning a school fees product and a bill payment product which would cover the required instalments in the case of death. We would expect the next suite of products to start rolling out in the next six months.

With the fairly elaborate funeral habits of the general population in Ghana, is this a purely life insurance product or is it backing up as a funeral policy as well?

It is certainly a form of funeral policy, in that the funds may well be used to cover the costs of the funeral. As you pointed out, Ghanaian funerals are very elaborate with the most remarkable coffins shaped in the form of cell phones or birds, and so the funeral has a huge impact on the finances of a household. Further, should the main income generator die,

The premium is deducted from the mobile wallet and MFS have actually recreated the recurring debit order on this platform so the premium collection is automated. This is unusual as mobile money initiatives often are based around push payments initiated by the user. The automatic deduction should make the experience for the consumer much more positive.

Regulation is a key area that needs to be supportive of m-banking initiatives. Has the environment been supportive in Ghana and have you had similar experiences in other markets where discussions have taken place to launch mi-Life?

We have certainly found Ghana an enabling environment for m-insurance with a regulator that has been encouraging of new initiatives. Other countries which we have operated in do tend to be far more restrictive in terms of using alternative distribution.

For example, in some countries, it is a requirement for an agent of the insurer to distribute the insurance, whereas in this case MTN is appointed as a corporate agent so we can leverage off their footprint. We are fortunate that the international insurance regulatory body, the International Association of Insurance Supervisors, is also working to try and enable the market for microinsurance.

How does mi-Life differ from products currently on the market? For example, Econet Wireless’s product ‘EcoLife’ which is offered in partnership with Trustco?

We understand that EcoLife is more of a loyalty programme which is paid for by the mobile operator with the level of cover linked to your airtime spend. mi-Life is different in that it is a voluntary product that clients can select according to the cover they need and it also allows more predictability in terms of the level of cover. AT

Issue 14 AFRICA TELECOMS 55

Move Beyond Segments to

Manage Customer Portfolios

By Poyraz Ozkan, Manager, Peppers & Rogers Group

56 AFRICA TELECOMS Issue 14

W

hich customer groups offer the most potential? How do you bundle your services to get the greatest return? And how can you balance maximizing customer value (attract, grow, and retain the potential) with acting in the best interest of your customers (customer experience)? These are questions that vex almost every company today.

behavior, organizations can then create the required insight for differentiation.

Segmentation will have little value unless the organization’s resources are aligned to customers. The purpose of segmentation is to activate “treating different customers differently” via the delivery of relevant offerings to a group of customers (portfolio) based on their needs, behavior, and value. For most organizations moving to such an alignment is quite challenging because they are structured and functioning as silos. For true differentiation, customers should be managed across the lifecycle.

Such effort requires a disciplined approach that revolves around customer Customers have common segments and extends across the customer lifecycle. needs, shared needs, and So, what has to change to enable the differentiating needs from a proper functioning of “treating different telecom operator.Organizations customers differently?” must know these needs at the • Aim : Create a clear set of strategy, action, and investment plans at the individual customer level customer portfolio level guide investment decisions for marketing, • Balance: Act in the best interest sales, and customer care activities. Typical of customers while balancing examples include the development of company resources. This means customized communication to high-value creating a culture of portfolio customers or the assignment of special ownership and an ecosystem to resources to high-value customers in the coordinate the delivery, as well contact channels. as making a dedicated function Value segmentation, however, cannot within the current organizational enable differentiation by itself, simply structure that will manage and because value is an outcome. In order coordinate the entire customer to truly understand their customers, lifecycle organizations must also know the “why” • Accountability: Integrate customer and “how” that leads to the outcome planning into the organization’s “value.” The “why” is represented by performance management a needs assessment -- understanding This approach, customer portfolio the underlying motive and need behind management (CPM), is a new, strategic interest in telecommunications services. way to deploying CRM that emphasizes Customers have common needs, shared customer knowledge, strategic planning, needs, and differentiating needs from a and execution as the cornerstones of telecom operator. a CRM initiative. It encompasses the Organizations must know these needs delivery of the right offerings to specific at the individual customer level, which customer portfolios based on their can be scored in the database. The “how” needs, behaviors, and values across part is represented by behavior - how their lifecycle. Like a stock portfolio, customers use an organization’s products, the value of a customer portfolio can go channels, and how they communicate. up or down. If a company can identify By putting together needs, value, and needs to influence the behaviors of the In the telecom industry voice revenues are in continuous decline, while data and content are becoming the new but challenging playgrounds for operators.

Add to that the increasing complexities of digital customer expectations, which is driving churn rates higher and customer acquisition costs up. Many chief marketing officers are looking for direction on where to focus their efforts and resources to differentiate and grow.

Understanding customer value with segmentation is definitely the first step for many companies. Customer value information, typically based on ARPU or related revenue metrics, is mainly used to

It requires a huge cultural change, which is hard to swallow for many traditional businesses. However, its long-term benefits improvement will be worth the pain of change. customers within the portfolio, the value of that portfolio can improve.

A CPM strategy is an enterprisewide strategy, not contained within one department or business unit. While traditionally segments are the responsibility of the marketing or customer service departments, customer portfolios can influence actions taken by marketing, sales, customer care, even strategic planning and capital investment, as companies allocate resources and take departmental actions to increase the value of customer portfolios. The customer information is so rich, the actions you’re taking are extremely direct. And this deep level of information and relevant actions will result in organic growth for the company along with customer loyalty for the customer.

For the CPM concept to succeed, organizations must change the way they think. Customer portfolios must become the heart of the organization, and the direction of the company should be coordinated by the portfolio managers.

Customer value, needs, and behavior will influence the way companies allocate resources, so the rules of engagement need to change how people work.

It requires a huge cultural change, which is hard to swallow for many traditional businesses. However, its long-term benefits -- in the form of organic growth, customer satisfaction, and bottom-line improvement -- will be worth the pain of change.

With CPM, each portfolio has an owner or manager; someone who is responsible for growing the value of the portfolio. A portfolio manager understands the portfolio’s value now, as well as what needs to be done to grow its value for the future. AT

Issue 14 AFRICA TELECOMS 57

In less than one year, telecom tariffs in Uganda have fallen by about 60%, sparked off by fierce competition in the voice segment of the market.

By Echel Adui

Staying the course in fierce Uganda market

I

n less than one year, telecom tariffs in Uganda have fallen by about 60%, sparked off by fierce competition in the voice segment of the market.

With the drop in tariffs, the very foundations of the industry were shaken as a new battle to maintain market share raged among the seven competing telecom firms in the mobile market, which accounts for 63% of the total telecommunications revenue, according to the industry’s regulator.

To illustrate the ferocity of the

58 AFRICA TELECOMS Issue 14

competition, in mid March market leader MTN Uganda threw a damper at Uganda Telecom Limited (UTL), threatening to switch off calls to UTL over claims of an unpaid US$8.5 million (Ush20 billion) debt, arising from disputed interconnection charges through the MTN network.

Normally matters like these are discussed and resolved amicably within the industry because of operators’ interdependence, without media joining in the fray.

Industry captains have therefore viewed this hard-hitting approach within the sector as a strategy to outwit competition and maintain shrinking market share by punching the competition where it hurts most – their subscribers. Were MTN to switch off calls to UTL, UTL’s subscribers would feel most aggrieved, while MTN users would also feel aggrieved because they could not call their UTL counterparts.

Price war versus market demographics Despite the entry of several data players, the voice market remained the platform for major competition and growth although the fixed-line segment is the second major revenue source for the industry.

By January 2011, there were seven telephone service providers active in the voice market and 13 in the data market.

Several other firms have applied for licences and are set to launch during the year.

While consumers benefited from the massive price cuts, MTN Uganda chief executive officer Themba Khumalo saw the whole episode of tariff wars as a destruction of value.

“The fundamentals of business will come back and we will get the equilibrium back and the stability will return. I believe price wars are not sustainable,” said Khumalo.

In the ensuing battle, operators’ revenue bases were some of the hardest hit, especially with most of the operators having to forcefully play to industry dynamics by also cutting call rates. Lower tariffs were offered alongside several creative promotional offers and products to woo customers.

The Ugandan market, like most of Africa, is every investor operator’s dream destination with large unexploited opportunities. But there is more to this market. Uganda has the second youngest population in the world after Niger with 48.7% of the population below 15 years, according to

the Population Reference Bureau’s 2010 World Population Data Sheet.

Coupled with the increasing Ugandan literacy backed by free universal primary and secondary education, this provides the promise of a future with a huge consumer base. This optimistic outlook has limitations, of course, should economic progress not match the population growth rate.

Mobile phone penetration was also at about 35% or 11 million mobile lines by the end of 2010, in a population of about 33 million. There are only about 350,000 fixed lines.

The post & telecommunications subsector posted a 30% growth rate in 2009/10, up from the 19.8% growth realised in 2008/09, even as major sectors of the economy took a hit from the trickle-down effects of the global financial meltdown.

“More important to note is that this growth was realised amidst declining GDP growth rates in the aftermath of the global economic crisis. The growth rate is attributed to increased investment in the telecommunications subsector and the diversification of product (data

and value-added services) in the market,” said a spokesperson for the Uganda Communications Commission (UCC).

An overview of the sector by the regulator indicates that gross margins shot up for all operators.

But with declining average revenue per user (ARPUs) and the heated tariff battle, the terrain was always going to be shaken.

“A look at the profitability ratios, however, show that some major cellular operators registered negative profitability,” said the UCC spokesperson.

It is this struggle to survive that is viewed as a likely launch pad for possible mergers and acquisitions in the near future. This little-discussed matter of M&As was quietly launched in October 2009 when the MTN Group increased its stake in MTN Uganda from 95% to 96% at a consideration of US$6.5 million (Ush15.6 billion).

Active telecom operators in the voice segment include Airtel Uganda, Warid, MTN Uganda, UTL, Orange, I-Telecom and Smile, the latest entrant.

But the dominant powers in this

The growth rate is attributed to increased investment in the telecommunications subsector and the diversification of product (data and value-added services) in the market,” Issue 14 AFRICA TELECOMS 59

We believe and are consistent that telecommunication products and services should be affordable for the people of Uganda lucrative voice segment are Airtel, Warid MTN and UTL. Despite having a presence in the voice segment, Orange has emerged more strongly on data.

The competition within the dominant five players offering voice services is quite stiff, which has meant that the smaller players, Smile and I-Telecom, are yet to stick their necks out in the market place as formidable competitors.

Also, the very existence of some of the operators is threatened by a market that is still largely urban based, with Smile and I-Telecom yet to make any significant investments outside the main urban areas.

Yet most unconnected people live in the countryside.

The interconnect fees debate A key factor in the industry is the interconnection fees paid by one operator to the other for routing its traffic through a competitor’s network. The figure remains a largely controversial and divisive matter. In fact, disputes over delays in remitting interconnect fees and the exact figure to be remitted was the genesis of MTN’s threat to terminate calls to UTL. In June 2010, industry regulator UCC

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published a new interconnection fee structure of $0.05 (Ush131) from $0.06 (Ush151). According to UCC, this was based on an independent analysis from a reputable international finance and audit firm. The new rate meant that operators would receive even less revenue money when routing calls through a competitor’s network.

UCC acknowledged that, in the past, interconnection rates were set by bilateral negotiations that were always premised on one telecom’s negotiating power.

While UCC says there will be another review before the end of the 2010/2011 financial year in June 2011, Khumalo says any discussions on the interconnect rate should be based on facts and not perception.

Patrick Mwesigwa, UCC director of technology and licensing, said the idea is to review the default interconnect fee so that operators can use them as a reference point. But even in the interconnect debate, UCC feels future tariff adjustments should not be the driver of interconnection review.

“A review should be driven by the changes in the underlying cost of services and should be carried out at least once

every two years, which the commission intends to do,” said Mwesigwa.

Airtel Uganda managing director V.G. Somasekhar said a lower interconnect going forward will further drive penetration in the country.

“We do hope it goes down because lowering the interconnect fees will bring about affordability and hence improve the tele-density for Ugandans. We believe and are insistent that telecommunication products and services should be affordable for the people of Uganda and lowering of the interconnect fees will bring affordability,” said Somasekhar.

While the interconnect debate rages on, operators are stepping up their creativity and breaking into high-value niches to remain relevant amidst the falling tariff and interconnect rates.

Airtel has, for instance, harmonised calling rates within the local market, the region of East Africa (Uganda, Kenya and Tanzania) and other Ugandan top calling destinations of India, China, Canada and the USA.

The regulator’s role versus quality of service UCC has received much acclaim across

the continent for prudent use of the rural development fund remitted by operators, by initiating projects that extend connectivity to the rural areas in Uganda.

But the regulator has also been faulted over the declining quality of service.

Discussions on quality have preoccupied the sector for the earlier part of 2011.

Many of the complaints range from overcharging users to low quality of service – mainly on voice – and with internet speeds being lower than what people pay for, according to UCC. Telecom operators have seen their subscriber numbers rise, especially during promotional times. But they have not correspondingly invested in maintaining network quality through building of infrastructure. According to Mwesigwa, the regulator has raised this issue with operators. Airtel’s Somasekhar endorsed the feedback on the quality of service performance and the standards set

by UCC. “At Airtel, as a matter of policy, providing quality of service to our customers is of high importance. We continuously monitor our quality of service and the results for the same period differed. We will continue to proactively engage the regulator in discussing this matter further,’ said Somasekhar.

Somasekhar said Airtel is growing its network in both urban and rural areas as well as building high capacity for a congestion-free network.

MTN’s Khumalo says the process must be wholesome. “Checking on one small area is not enough. Look at the whole area through spot checks on the network by taking an overall geographical space,” said Khumalo.

Limitations One limitation to increased access and penetration is the low supply of cheap handsets on a large scale. This is partly due to the 18% value-added tax charged on handsets.

Uganda has an 18% VAT levy on mobile phones and 0.3% clearance fee

– bringing the total levy on handsets to 18.3%. In contrast, Kenya removed the VAT on all mobile handsets, cellular networks, telephones and other wireless networks in the national budget of June 11, 2009.

Going forward, large-scale vendors like Nokia who have for several years lobbied government to scrap the tax on handsets will have to intensify their lobbying and engagement with partners.

Dorothy Ooko, Nokia communications manager for East and Southern Africa, says scrapping this tax would not only increase access to the handset driven by lower prices but also eliminate the smuggling of cheaper handsets from neighbouring Kenya and even used phones from other states. Smuggling would also make Uganda miss out on other tax heads imposed on new handsets.

Device options In trying to overcome these limitations amidst the tight competition, operators have had to readjust strategy.

One of the strategies has been through the introduction and large marketing of previously unpopular handsets that hold more than one SIM card and were considered cheap, unreliable devices.

One of the ways operators have maintained subscribers is awakening to the fact that consumers are not going to be tied to one phone line.

They have started to appreciate the fact that Ugandans possess more than one line in order to benefit from the several products and promotions offered at different times and prices.

Warid telecom, for instance, introduced the “Daboline”: a phone with two SIM cards that was a big hit, with the small handsets quickly snapped up by consumers within days.

Airtel launched “Ssalongo” while UTL pulled out the “Supaduo” and “Twinsim”.

All these handsets hold double SIM cards and to a good extent allow consumers not only to maintain their original phone lines but also to take advantage of promotional offers from other operators.

Also, most of the handsets average about US$22 (Ush53,000) each and are considered quite affordable.

Data opportunity as revenue alternative By the close of 2010, UCC estimates that around five million people were accessing and using the internet at least once a month, through internet cafés and other facilities. About 500,000 subscribers have bought dongles, 3G and other handy packages.

The data market will emerge as a key alternative revenue bedrock, with the alluring demographics of Uganda boosted by the price decline in international bandwidth due to several undersea fibreoptic cables now serving the country.

Again high end-user pricing will remain a limiting factor.

Statistics from UCC indicate that much of the estimated US$270 million (Ush650 billion) that was invested in the sector in the 2009/2010 financial year was in the rollout of mobile broadband solutions and other internet-related infrastructure.

Analysts therefore view the recent discovery of oil – and the expected economic transformation of the country should the oil money be managed properly – to drive user uptake by creating better chances for investors in the sector to sell their devices, airtime and data.

This, in turn, will create the connectivity revolution that Uganda and Africa missed in the broadband revolution.

Data-enhanced devices from Huawei like MTN and Orange’s Ideos, with Google handset, will also play a key role – not only in driving and maintaining voice segment but also in pushing for an increased data market, especially on the strength of the positive demographics described above.

Although the data-enhanced handsets are currently somewhat upmarket and costly, increased availability from competition will drive the prices further down. AT

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Wireless in,

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wallets out Innovative short-range connectivity promises to transform mobile phone transactions.

by bradley shaw Do you associate the ancient English word ‘wallet’ with a compact folding case for cash, cards and receipts? Or has this word acquired for you a more virtual, electronic meaning? Something cooler, more digital and more 21st century? Exactly how redundant are our leather wallets becoming as we gradually ease into mobile phone transactions involving radical technology like Near Field Communication (NFC)?

NFC is a relatively new technology that is slowly taking centre stage and will revolutionize the way we transact on a daily basis. The technology is broadly explained as a short-range (typically between 4cm and 20cm) wireless connection that allows devices to communicate in various ways.

Franco Bernabè, chairman of the GSMA and CEO of Telecom Italia, says: “NFC represents an important innovation opportunity, and will facilitate a wide range of interesting services and applications for consumers, such as mobile tickets, mobile coupons, the exchange of information and content, access to cars, homes, hotels, offices, car parks and much more.”

However, Bernabè cautions that “the adoption of different approaches to NFC will only serve to fragment the market” and advises that “by uniting around a single standardised approach to mobile NFC, and by collaborating across the entire ecosystem, our industry will continue to develop the compelling services that customers demand”.

Africa is in good company

Currently, various trials are being implemented worldwide. For example, McDonald’s fast food chain in the UK has revealed plans that it will be implementing a contactless payment system in 1,200 restaurants across the nation, with approximately £1.5 million being invested in this upgrade.

Closer to home for Africa, at the Mobile World Congress (MWC) in Barcelona in February, Airtel announced a trial working with Oberthur Technologies that would see Airtel servicing 15 African countries with a contactless payment solution.

The NFC payments technology used

by Airtel Africa has been specifically developed by Oberthur Technologies’ NFC R&D team to meet African needs.

Oberthur developed both the NFC SIM and m-commerce security solutions for the service and has developed NFC applets, integrated and customised POS applications and engineered unique NFC enablers for specific user handsets.

The solution was nominated in the Best Mobile Technology for Emerging Markets category for the 2011 GSMA awards.

“This is a landmark in Africa and the first steps of an evolution of the payment ecosystem for mobile users, banked and unbanked, with no compromise on security,” said Thierry Siminger, MD of the Russia, Middle East and Africa Region of the Card Systems Division at Oberthur Technologies. “True innovation can be realised in these markets and

Issue 14 AFRICA TELECOMS 63

we look forward to the commercial NFC launch across 12 countries at the beginning of 2011.”

During his keynote address at the MWC this year, Google’s former CEO Eric Schmidt – who on 4 April handed this position over to co-founder Larry Page – painted a great picture of how NFC could work: “I’m walking down the street and I need pants [trousers]. My phone has an NFC chip. It knows where I am. It tells me about two stores, one to the left with a 20% discount and one to the right with a 30% [discount].

“It is programmed to know I am a cheapskate so points me to the right. And the store knows what pants I want!

“You don’t think this is going to work, guys? Trust me, this is consumerism.”

To show Google’s commitment to the technology, it has been reported that Google will be supplying all of its employees with Google Nexus S mobile devices which will all be NFC enabled.

Enabled, secure and cool?

From an Africa perspective two developments are incredibly important: firstly, mobile devices need to be enabled with NFC chips and secondly, security measures related to these NFC transactions need to be totally secure.

Devices being enabled with NFC technology will be as important as the payment solutions themselves because the ecosystem cannot operate without either component. We currently see a number of manufacturers already installing NFC chips in their devices.

These include Google with its Nexus S; Sagem Wireless with its Cosyphone; and Nokia’s C7 device, which has the hardware installed but needs a firmware upgrade to activate the NFC technology.

The recently launched Samsung Wave 578 has NFC listed in its spec sheet, but the question is whether or not this technology will be activated.

As for future entrants into the NFC ecosystem, Apple looks likely to join the fray with a number of NFC-related patents it has applied for. At the MWC in

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Barcelona, co-CEO of RIM Jim Balsillie confirmed the company’s plans to include NFC in its devices. “Many, if not most” BlackBerry devices will have NFC this year. This gives a clear indication that RIM will certainly be releasing devices that will be NFC enabled.

Security is being tackled in many different ways across the NFC ecosystem; one such example is the mobile payment startup RFinity in Idaho in the USA. It is using a system that verifies incoming radio frequency (RF) signals and doesn’t take any action without a user’s approval, thus preventing malicious attacks. It protects consumers by encrypting the information transferred between consumers and sellers and by changing the identifier information after each transaction.

These one-time-use codes and complex cryptographic signatures assure that even if the transaction is intercepted, the code is worth nothing to the attacker.

It’s like being issued with a new credit card number before making a purchase and then having that number disabled as you leave the store.

These transactions also need to be completed with a customer PIN number inserted into the vendor’s point-of-sale (POS) system.

In other words, payments using NFC will be secure as the mobile device carrying the NFC chip will not be the only requirement for completing a transaction. Should the device be stolen or lost, verification in some form will be essential in order to access funds held in an NFC-enabled account.

A number of factors need to come together for NFC to gain momentum in the Africa market. Given that their customers’ mobile devices have been NFC enabled, retailers and vendors will need to have POS systems that allow for NFC transactions to be completed.

Above all, populations will have to embrace the technology. This does not seem to be much of a concern if one considers that to date Africans have been pioneers in the m-banking sector,

with millions of enthusiastic individuals taking advantage of available mobile transaction solutions.

And what about leather wallets and banknotes? I’m putting my money on mobile phones. AT

NFC, social media and bookings NFC will also give you the ability to Tap-to-Tweet should you be at an event and wish to ‘announce’ via Twitter that you are attending. Tap your mobile to an NFC enabled poster or board and a preset Tweet will be sent on your behalf. ‘Like’ this same event on Facebook and then share content captured by yourself on your mobile (photos, video etc) on the event’s Facebook page. Should the event have a specific app that has been developed, again tap your device and the app will be loaded. Then you meet a potential client or supplier: tap each other’s mobile devices and swap contact details, making business cards redundant. Getting to this event, you may have needed to travel and book accommodation – NFC can facilitate this interaction as well. Instead of handling a physical airline ticket you can store it on your mobile phone; and using NFC you can check in similarly with a hotel reservation.

The tap of a mobile device becomes ever more powerful as one looks at the neverending possibilities of where NFC could take us.

Foreign private companies entering the telecoms industry will encourage others to come to Ethiopia and offer diversified services

By Protus Onyango

Bringing Ethiopia up to speed In this African country second only to Nigeria in population size, much has to be done for its citizens to begin to enjoy the benefits of ICT

T

he Federal Republic of Ethiopia is home to over 88 million people but its telecommunication sector is marked by a low standard of services.

With a penetration rate of two percent for fixed-line telephones and mobile telephones, the country lags behind its neighbours like Kenya, which has 22 million people using mobile phones out of a population of 40 million.

On average, there are now 60 mobile subscriptions for every 100 people in

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the world. In developing countries, the figure stands at 48 – more than eight times the level of penetration in 2000.

In Africa, average penetration stands at more than a third of the population, and in North Africa it is almost twothirds. Gabon, the Seychelles and South Africa now boast almost 100 percent penetration.

Only five African countries – Burundi, Djibouti, Eritrea, Ethiopia and Somalia – still have a penetration of less than 10 per 100 inhabitants.

Parastatals

The Ethiopian Telecommunication Agency (ETA) and Ethiopian Telecommunication Corporation (ETC), both government parastatals, are charged with the regulatory responsibility and actual rollout of telecommunication services in the country. The ETC is the only provider of telecommunication services, including fixed-line and mobile telephony and internet service.

The internet market of around one percent of the population is low even

by African standards. It is poorly developed compared with the potential demand and size of the population due to ETC’s monopoly as the sole internet service provider.

“Allowing private players will defeat our purpose of providing easy access and affordable network to our citizens. We use telecommunication as a development, non-profit tool for our people. By surrendering our hold on it, it will mean that only those who can afford it will be able to access it, leaving out the majority,” says Debretsion Gebremichael, the country’s Communication and Information Technology Minister.

Upgrading services

But other industry players, who include donors and business people, have piled pressure on the government to privatise some, if not all, aspects of the sector, saying the high tariffs are bad for business and go against the very purpose of providing the services to people. Observers say it is only the government, donors and the business community that enjoy the fixed wireline, wireless services, mobile service, internet and data services, 3G services like WCDMA and CDMA. Other services available to business customers include mobile data, IP services, domain name, interconnection and international roaming. And the government is listening because it is the business community, the donors and government customers that contribute substantially to Ethio Telecom’s revenue base.

“In November last year, we launched Ethio Telecom to take over from ETC with a mandate to create a customerfocused, quality-oriented, world-class telecom infrastructure and service with efficient work flows and organizational structure, bringing cultural change and business practices in building a modern

telecom company with a new generation workforce,” says the minister. It has a five-year plan to focus on education, health and agricultural uptake of the telecommunication services.

Immediately after the relaunch of the corporation, the country signed an agreement with a foreign company to run Ethio Telecom for two years.

“The €30 million deal is for France Telecom to improve and modernise Ethio Telecom’s overall business aspect through implementing new organizational structures; better work processes; reorganisation of sales provisioning; network organization and maintenance; launching of new service packages; distribution of network expansion and human resource capacitybuilding tasks.

“It will also be applying customerfocused services with best customerhandling practices,” says Gabremichael.

The parastatal has also signed a US$6.7 million deal with Dimension Data Network Solutions to improve its nationwide broadband internet project.

This will improve the broadband VSAT and multimedia to have a carrying capacity of 100, 000 internet users per minute and allow 2,000 dedicated

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Foreign private companies entering the telecoms industry will encourage others to come to Ethiopia and offer diversified services internet customers access services either via ADSL, fixed wireless and metro or ethernet connections.

The company will provide other value-added services like security, IP telephony, virtual fax, unified messaging and dynamic web hosting. The project is to use an Electronic Voucher Distribution (EVD) system that fully automates services via a prepaid platform.

Work in progress

Another project aimed at improving the telecom infrastructure is the US$2.4 billion four-year project being carried out by three Chinese companies. Huawei Technologies, Chinese International Construction Corporation and ZTE Corporation have secured loans from the World Bank and other international finance institutions to undertake what is billed as the biggest ever telecom infrastructure project in Ethiopia.

“At the end of the work, it is expected that there will be an increase from the current 1.5 million mobile users to seven million; one million landlines to four million; and fibre optic cable laid across the nation as compared with the present six-kilometre-long fibre optic cable,” says the minister.

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With an African country that is second only to Nigeria in population, a lot needs to be done so that the majority of its citizens can enjoy the benefits of Information Communication Technology (ICT). Ethiopia has only half a million internet users with 150, 000 of them on Facebook.

Although the Ethiopian government is now investing heavily in its telecommunication’s industry in order to boost communication flows and reduce rates, it has to do more.

The majority of Ethiopians are yet to experience the benefits of ICT like mobile and internet marketing, research and general information. It still uses the expensive satellite dishes and focus is on government functions and education but not activities that will have a multiplier effect on the whole population.

Liberalisation of telecoms and banking

The use of internet has enabled citizens to topple governments in Tunisia and Egypt, Ethiopians are at a clear disadvantage were they to copy their Arab brothers and sisters.

But the recent developments which have seen private companies from other countries play a part in the

telecommunication industry are good pointers, which will encourage other companies to come to Ethiopia and offer diversified services.

The International Monetary Fund and other agencies have also called on Ethiopia to liberalise its telecommunication and banking sectors to open those areas to international competition. And the World Trade Organization (WTO) has told Ethiopia that only when it liberalises those two sectors will its request to join it be discussed.

“The world thinks liberalising our telecommunication, banking and insurance sectors will attract broad foreign investment and allow our economy to reach its full potential,” says Gebremichael.

He adds: “One of the assumptions behind government’s resistance to liberalise is that, if liberalized, the service providers’ focus will be on competing in the already established urban market – in order to escape the high infrastructure investment cost these services require to reach the rural areas.”

It is hoped that with the current developments, rural areas, where

over 80 percent of the population live, will soon be able to enjoy banking and telecommunication services.

The country is one of the least-banked countries in sub-Saharan Africa, judging by the low ratio of bank coverage to population size: only 617 bank branches serve the whole of Ethiopia. Currently one branch serves about 130,000 Ethiopians. This figure drops to 14,000 in Tanzania, 31,000 in Kenya and 70,000 in Uganda.

Fibre optic is here

Officials from SEACOM recently visited Ethiopia to persuade senior officials in the telecom sector that Ethiopia should connect its domestic networks of fibre optics (believed to have surpassed 10,000 km) through Djibouti to an undersea cable system they have brought to the shores of the Red Sea. Ethiopia has an 80 Gigabyte fibre optic network via the Port of Sudan landing station.

Other western companies eyeing Ethiopia as a potential market are SEAME-WE 3, with cable from Southeast Asia to Europe; The East African Marine Systems (TEAMS) from Kenya to Dubai; and the Eastern Africa Submarine Cable System (EASSy), with landing

points in six countries, from Mtunzini in South Africa to Port Sudan (9,900 km).

If Ethiopia leases from EASSy, it will be one of the five landlocked countries in Eastern and Southern Africa to be connected with marine fibre optic cable, which is cheaper and much faster than other options.

Landlocked countries such as Ethiopia, which has to depend on neighbouring countries with an outlet to the sea. They have to choose a landing point that offers the highest bandwidth and cheaper prices, according to experts in the area.

Ethiopia’s lease of marine fibre optic cable from at least three neighbouring countries would dramatically change the way people communicate through data, audio and video. The state-owned telecom monopoly, the Ethio Telecom, has been providing data and voice services largely connected via a very expensive and slow satellite connection, operated by Hughes International. While there is also a low price, high capacity bandwidth connected via Port Sudan.

“Not only has this arrangement made the lease of bandwidth very expensive, but it also limited the capacity at 895kB per second. It could connect to any of

the cables owned by the contending companies, either through Port Sudan, Djibouti, Somalia or Kenya. And it has a far larger population than any of these countries, thus offering Ethio Telecom managers the leverage to negotiate better deals,” says Dr Shem Ochuodho, a Kenyan with a PhD in Computer Science who is in charge of ICT for the Southern Sudanese government.

He adds: “However, the most potent contender so far is SEACOM, with its landing point already installed in Djibouti, according to reliable sources.

SEACOM is a privately funded venture which sells international capacity to global networks via India and Europe after it launched operations in July 2009. It is the first company to offer broadband services to countries in East Africa.” South Africa, Madagascar, Mozambique, Tanzania and Kenya are interconnected via a protected ring structure on the continent. A second express fibre optic cable pair connects South Africa to Kenya. These two pairs have a combined designed capacity of 1.28TB (terabytes) per second, of which 100GB per second is currently active. AT

Issue 14 AFRICA TELECOMS 69

THE last word

IF ANYONE CAN, A FORAGING GRAN CAN! With winter still being in felt in parts of Europe, Georgian pensioner Hayastan Shakarian, was out gathering and collecting firewood when by accident she cut through the fibre-optic cables connecting Georgia and neighbouring Armenia to the Internet.

In today’s connected world, it has become inconceivable and not easily tolerated for a nation to be disconnected from the Interweb. When such occurrences take place, the red phones start ringing and the bat signal can be seen for miles around.

Batman, Gotham City needs you. In the case of Georgia and Armenia, the culprit was not the Joker nor the Riddler, but an old age pensioner staving off the cold.

In the blink of a KAPPOW, WHACK, CRUNCH, AND BANG, a little old lady armed with nothing more than an orange saw, literally single-handedly caused havoc in two countries.

Was this the work of a new villain or some cunning secret agent planning to take both countries off the grid? Or as the terrified OAP is claiming, that this was all a terrible and ghastly mistake. “I have no idea what the Internet is,” she told reporters.

As Shakarian told AFP that she was just a “poor old

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woman” who was not capable of committing such a crime.

“I did not cut this cable. Physically, I could not do it,” she said, repeatedly bursting into tears as she spoke.

Unfortunately, her pleas fell on deaf ears, as the Georgian Interior Ministry was, at the time of writing, planning to throw the full force of the law at her. According to them, Ms. Shakarian had confessed to cutting the fibre-optic cable, and so should be duly punished. What methods were used to elicit this confession we can only imagine. Possibly the threat of taking away her bus pass, or even worse, confiscating her trusted saw, had the desired effect.

Georgian Railway Telecom, who owns the fiber cable, explained that the damage was so serious that it caused 90 per cent of private and corporate Internet users in neighbouring Armenia to lose access for nearly 12 hours while also hitting Georgian Internet service providers.

“My mother is innocent. She is crying all the time. She is so scared,” said her son, Sergo Shakarian.

In the end, whether Ms. Shakarian is convicted or simply cast as a villain, the punishment needs to fit the crime.

As Robin, the Boy Wonder, undoubtedly would have exclaimed at these farcical events, “Holy priceless collection of Etruscan snoods, Batman!” AT

THE AUTHOR: Mohammed Khan writes exclusively for Africa Telecoms Magazine