Broadband* access has become increasingly available in Africa over the last four years according to the authors of a new report published by Balancing Act this month (http://www.balancingact-africa.com) For the first time ever, this report looks in detail at broadband availability based on a survey of 100 selected operators. Broadband gives African users much faster internet connections than they have previously experienced, access to higher speed downloads of things like music and VoIP** phone calling.
Between 2001 when the first broadband access was rolled out and the present day, a wide range of both wireline and wireless broadband technologies have been deployed across Africa. The first were deployed from around 2001, and the pace has picked up from 2003 onwards. The technologies which have been deployed have changed over time; the most recent trend has seen the implementations of WiMAX 802.16 standard networks which can deliver broadband over a range of up to as far as 75-km.
According to one of the report’s author’s Paul Hamilton: ”Uptake of broadband is accelerating in the most developed Internet markets. In terms of uptake of broadband, the survey indicates that there are four tiers. The markets of Egypt, Madagascar, Reunion, and South Africa have tens to hundreds of thousands of broadband subscribers. There is a middle tier, such as Senegal, which has between 1,000 and 10,000 subscribers. And then there is a third tier with the majority of other countries which have deployed broadband in which operators currently report several hundred subscribers”.
Behind this lies a fourth tier in which operators in some third to a half of African countries have either tens of broadband users, or have not yet invested in the roll-out of broadband networks. This exaggerates a similar pattern seen for existing dial-up Internet markets. In part, it is a chicken and egg situation; if operators and ISPs do not achieve critical mass of users and revenues sufficient to invest in new infrastructure they will not do so.
But as the report’s other author Russell Southwood observes: ”If broadband access can’t be supplied at lower prices than at present, it will remain a niche market for corporates and wealthy individuals. More competition is needed to lower prices for every element in the delivery of the service. The SAT3 monopoly keeps international prices high for West Africa and there is not yet enough competition at the national backbone and local loop levels. However things are beginning to change quite quickly in countries like Kenya and South Africa and others are sure to follow”.
One of the biggest drivers of broadband demand could prove to be customers wanting access to VoIP calling which will allow them cheap international calling, enabling them to talk to friends and family in the diaspora. Although PC-to-PC calling requires users to have a computer, it is likely that a number of operators will offer VoIP-enabled handsets for using with a broadband connection, making it easier for consumers who want a simple option, either at home or in a cyber-cafe.
*Shorthand definition of broadband
There is no single accepted definition of what broadband is. However in the developed world there is some consensus that broadband means a download speed of at least 256 Kbps. So when Tiscali UK advertised a 150 Kbps service as “broadband” it was condemned as misleading by a number of other providers. One of those protesting was BT who now claims that broadband is any connection over 500 kbps.
The other definition is that broadband refers to the ability of the user to view content across the internet that includes large files, such as video, audio and 3D. Broadband refers to an increased ability to do so. A user's broadband capability is typically governed by the last mile issue, the connection between the ISP and the user.
**Shorthand definition of VoIP
Voice over Internet Protocol (VoIP) is a generic term which refers to a technical standard that enables the transmission of voice traffic in whole or in part, over one or more network, which uses the Internet Protocol. VoIP traffic can be carried on a privately managed or the public Internet or a combination of both. VoIP technology supports a wide range of applications from traditional telephone services to interactive games. (Source: OFCOM)
The Report
“African Broadband Markets” includes: a survey of deployments of broadband access networks in Africa in 2005; CATV; ADSL; VSAT; ISPs and Wireline Broadband Service; local loop unbundling:’Sharks vs Fishes”; Metropolitan Area Network operators; WLAN/Wi-Fi; mobile operators; FWA; Wi-Max; pricing; and the implications for international transmission capacity forecasts.
For further details: http://www.balancingact-africa.com
Balancing Act is an online publishing and consultancy business covering telecoms, internet and computing in Africa. It is one of the primary sources of information and expertise in this area. It publishes Balancing Act’s News Update, a weekly e-letter which goes out to 8,200 subscribers across the continent and a monthly French-language edition which goes out to 1,000 subscribers.
The authors
Paul Hamilton, an independent consultant specialising in African telecommunication markets, is an associate of Balancing Act. Formerly the Telecoms Research Manager at World Markets Research Centre (WMRC), he has undertaken a range of research, analysis and consulting assignments for operators, vendors, NGOs and regulators.
Russell Southwood is the Chief Executive of Balancing Act and the Editor of its weekly e-letter on telecoms, internet and computing News Update. As a consultant, he has worked for a variety of clients looking at: the demand for fibre infrastructure in Africa over the next five years; the creation of a regional internet exchange point; the future for VoIP services in Africa ; the development of local internet content and services; and policy development.
At least 18 incumbent fixed-line operators had deployed ADSL by September 2005, with a few including Telkom SA and Telecom Egypt offering a wider range of wireless solutions (WiFi, FWA, CDMA2000, WiMAX). In these markets where incumbents have deployed ADSL, ISPs typically resell the broadband services of the incumbent. In a few cases however, the local loop has been unbundled and ISPs have installed DSLAM equipment at local exchanges enabling them to offer their own independent DSL networks. The Ghanaian ISP Internet Ghana for example is now offering ADSL in the capital - in Accra North, Accra Central, and in Cantonments (see below). Otherwise ISPs and other service providers are providing their customers with broadband services using a variety of wireless technologies including wireless local area network (WLAN)/ WiFi, fixed wireless access (FWA), cellular (GPRS, EDGE, W-CDMA, CDMA2000 1X, CDMA2000 1X EV-DO) and domestic VSAT, or a combination of these. The particular technologies chosen by operators reflect the regulatory factors, unique demand requirements relating to coverage, competition and pricing, and quality of service, within each given market. From the consumer perspective, the up-front costs of terminal equipment is also very important, with costs ranging from inexpensive WiFi equipment to more expensive C-band antenna.
The key trends from the survey are that:
∑ ∑ ISPs drive broadband deployments to serve their customers: 'classic' vs 'unorthodox' deployments. Outside Egypt and South Africa, the African market is being driven by ISPs and other service providers to provide better service to their best customers. In many cases ISPs are migrating up the value chain to become infrastructure providers, and in what are highly competitive internet markets, broadband has become the key differentiator between competing ISPs. The 'classic' broadband deployments of incumbent fixed-line operators promote a more rigid market structure; 'unorthodox' deployments by ISPs and others tend to promote a more organic market structure with numerous infrastructure providers utilising a mix of technologies.
∑ Fixed-line incumbents have ‘classic’ fixed-line broadband deployments. By September 2005, ADSL had been deployed by 18 African incumbent fixed-line operators. A few of the largest incumbents have also deployed a range of wireless broadband technologies, to extend the provision of broadband services beyond the reach of the copper PSTN access network. Telkom SA for example deployed ADSL in 2002, broadband two-way VSAT service in 2003, a nationwide WiFi trial in 2004, and a WiMAX trial in 2005.
∑ Fibre MAN operators serve core urban market for broadband services. A new breed of alternative fixed-line operator is emerging, such as Arobase in Côte d’Ivoire, Kenya Data Networks (KDN), Terracom in Rwanda, and both 21st Century Technologies (21CTL) and Victoria Garden City in Nigeria. These are deploying fibre metropolitan area networks (MANs) in main commercial cities, to provide high-speed access to corporate clients as well as backhaul capacity to downstream operators including mobile operators, ISPs. The main commercial urban areas are the core market for broadband services, with a concentration of businesses and other users.
∑ The most prolific implementations of broadband are wireless. By far the most prolific implementations of broadband have been wireless: two-way Ku-band broadband VSAT offered by satellite service providers, localised WiFi hotspot offerings typically by ISPs, and broadband FWA by ISPs, alternative fixed-line operators and also incumbents. VSAT is ubiquitous, every square inch of Africa is covered by satellite footprints capable of delivering Ku-band services, the only restrictions to its use being licensing regimes in different countries. WiFi in the often licence-free ISM (industrial, scientific and medical) 2.4 GHz and 5 GHz bands are also prolific as to be too numerous to account for individual providers or hotspots in this continental survey, and again are restricted only by the licensing regime for these frequencies. Otherwise, the third most prolific broadband implementation is of Fixed Wireless Access (FWA), most commonly deployed in the 3.5 GHz band.
∑ Mobile operators enter the broadband space. With the launching of 2.5G and 3G services, mobile operators are now positioning themselves to compete against fixed-line operators for the provision of broadband services. There are two migration routes from voice to broadband technologies, one for GSM operators along the GSM – GPRS – EDGE – W-CDMA route, and for CDMA operators along the CDMA IS-95 – CDMA2000 1X – CDMA2000 1X EV-DO route. By August 2005, ten African GSM operators had launched 2.5G GPRS networks, and three had launched 3G W-CDMA networks. Behind these, at least another dozen are planning the implementation of GPRS, and one was planning to launch W-CDMA by the end of the year (Cell C in South Africa). A number of other operators had also deployed at least fifteen ‘2.5G’ CDMA2000 1X and were in the process of deploying four ‘3G’ CDMA2000 1X EV-DO networks.
VoIP* telephony has been largely illegal in Africa but a new breed of telecoms regulators will open up its use and this is most likely to happen in West Africa, according
When Mauritius launched a number of legal, international VoIP calling services at the beginning of 2004 it became the first African country to take this major step. Although Mauritius is very different from every other African country, its first move into VoIP is the opening round in the steady legalisation of VoIP services throughout the continent. The question is no longer if it will happen but when will it happen?
West Africa has particularly large VoIP grey markets and the incumbent telephone companies in two of the larger markets have put numbers on its size. Rein Zwolsman, CEO of Nigeria’s Nitel estimated that before he put in place cuts in international calling rates, that a staggering 90 per cent of international calls were in the grey market. Oystein Bjorge, CEO of Ghana Telecom put the value of the grey market in Ghana at somewhere between US$15-25 million a year in 2003:”(These are) ball park figures. It depends on the rates you apply and the volumes”. In other countries, the grey market is estimated at somewhere between 10-20% of the overall market.
