ICT in Africa: The future is brighter

LTE is coming

Just as Africa skipped fixed-line services to go straight to mobile, the continent’s operators are increasingly bypassing 3G networks and focusing on 4G/LTE infrastructure. As recently as the middle of last year, only six African countries had live 4G/LTE networks, but now they are coming thick and fast.

Smile Telecommunications has launched commercial LTE services in Tanzania and Uganda, Surfline has launched its own in Ghana, and Nigeria’s Spectranet has launched in Lagos and Abuja and is in the process of rolling out in other cities, including Kano, Ibadan and Kaduna.

The Rwandan government is working with South Korea’s KT Corporation to roll one out, Glocall Telecom is working on plans in Somalia, while Huawei is building a network in Ethiopia. South African operators Telkom and Vodacom are testing LTE-A services, while even troubled Somalia is set to launch a 4G network.

Currently, most African operators recycle their existing spectrum for LTE services, though there is a continent-wide push for new spectrum to be made available through 700MHz and 800MHz bands. This would encourage new entrants to challenge the incumbents in the continent’s journey towards LTE.

The benefits offered by LTE networks to Africans include its low fixed-line infrastructure build out and its high population densities, which allow operators to reach more people more affordably, perhaps a crucial benefit as Africa looks to tackle its last-mile connectivity issues.

Challenges remain

Van Huyssteen notes, however, that operators need to overcome a number of hurdles in order to turn the potential of the sector into revenues. One hurdle is the low level of disposable income compared to many other markets. Only 16% of Africans are online compared to 77% in the developed world.

“The biggest challenge is how to make services available and sell them profitably to a population of users who generate relatively low revenues per user, and many of whom are geographically dispersed across massive rural areas,” Van Huyssteen says. “These factors mean that both operators entering and those currently doing business in Africa need to develop lean operating and business models that can be profitable at relatively low average revenue per user.”

Tower sharing in order to reduce costs is becoming increasingly common, but issues such as poor regulation or low levels of competition are still hindrances. Regulatory regimes need to be adapted to the current climates in many nations. Across the continent, most of the national regulatory regimes were established in the 1990s. Though some countries have to an extent overhauled these regimes to catch up with new developments, many have not. While there are efforts in some countries to encourage new entrants into the market – as with the granting of MVNO licences in Kenya – these efforts have not been seen across the board. These shortcoming has ensured that quality of service (QoS) issues remain in many countries.

A number of international initiatives have sprung up in the last year to bring more affordable communications to Africans, notably the Alliance for Affordable Internet (A4AI), which has already begun working with several African governments, notably Nigeria, Ghana and Mozambique. Others include Facebook’s internet.org, which aims to provide internet access to 5bn people, and Google’s Project Loon – which looks to provide connectivity to underserved regions through balloons.

Yet the growth in the local telecoms market suggests Africa may yet become better connected through the efforts of its own operators. As mobile networks increasingly fill the role of banks in facilitating the movement of money, and the swift rollout of LTE/4G networks looks to tackle last-mile connectivity, the future appears bright for the sector.