The report begins with a critique of the telecommunications regulatory environment in African countries, and then a regional status of the policy frameworks for information and communication technologies (ICTs). ‘In an increasing number of countries regulators are asserting their independence, introducing increased competition and setting ambitious universal service targets,’ says Sean Moroney, Chairman of AITEC. ‘The regulators have a vital role to play and are under increasing pressures. All efforts and resources need to be mustered to increase their expertise and enhance their status. They have a gargantuan task in balancing the vested interests of existing operators and investors who want to extract every last possible cent from their monopoly or duopoly advantages – against the national interest of increased connections and reduced costs.’ The report then goes on to provide a detailed inventory of the regional telecommunications infrastructure underpinning ICTs in Africa, and an analysis of the new service offerings which are being deployed by fixed-line and mobile operators, Internet service providers (ISPs) and satellite service providers.

Cutting through these infrastructure and services are a number of constraining factors on the growth of ICTs in Africa. Cost is one of the key constraints, creating irrational paradoxes: even though Africa has some of the poorest countries in the world, it has some of the highest costs for international calls, for mobile services, and for international bandwidth – which consequently makes it more expensive for an African ISP to operate than its counterparts elsewhere in the developed world. Some of the new service offerings are based on new economic models which help to radically lower costs. Prepaid billing, for example, has brought great success for mobile services; the introduction of new low-cost satellite-based services to increase the availability of bandwidth, the increasing importance of voice over Internet protocol (VoIP) for international calls, and the first adopters of the free ISP model in the region. These models and technologies, in turn, present challenges to the established regulatory environment and to policy-makers at both the national and regional level.

The report concludes with an ‘African Connectivity model’. Based on the premise that all international bandwidth is procured either by satellite or regional fibre projects, the model demonstrates the evolution of international bandwidth over the last five years and the patterns which emerge.

Source: African Infrastructure and Service Report 2002/03. To view the full animated model, click here. This is a large file (500K), please allow time to download.

Regulation and Policy

‘The weakest link in the liberalisation process is at the policy level,’ says Muriuki Mureithi, CEO of Summit Strategies in his chapter on Regulation. ‘After hurriedly setting up and promulgating telecommunication laws in response to pressure, governments failed to establish an institutional mechanism to continuously review sector policy...Consequently, many governments now find themselves with policy frameworks rooted in the past and unable to respond to the demands of today and the near future.’

‘The backdrop to the sea-change in the structure and dynamic of telecom markets are those tough decisions taken by African Telecommunication Ministers to liberalise the sector and to introduce regulatory frameworks to manage the new multi-operator environment. The ensuing competition has clearly stimulated demand: with the number of subscribers doubling every year, Africa is now the fastest growing cellular market in the world. But how far can competition tap the latent (suppressed) demand in Africa? Emerging trends indicate that the timing of the introduction of cellular competition is fostering market concentration. Oligopolies/monopolies are entrenching themselves in the market. This concentration of market power is eroding the benefits that competition can bring, and will see a return to the regime of high tariffs and low growth, driven this time by the private sector maximising profits in a de facto monopoly.’

Telecommunications regulation sits within the wider ICT policy-making environment, which at the regional level spearheaded by the United Nations Economic Commission for Africa (UNECA). ‘The African Information Society Initiative (AISI) has provided the continent with a common framework, a useable and workable guide for countries to formulate their policies and plans,’ says Aida Opoku-Mensah, Team Leader for the UN Economic Commission for Africa’s (ECA) Promoting ICTs for Development Programme in her chapter on policy. ‘Without this framework, many countries would have been struggling to keep abreast of developments in the information society and today, some of the poorest countries in the world such as Djibouti, Central African Republic and Niger are developing NICIs under the AISI framework and working towards an information society’.

‘This programme has proved pivotal both for the development of national ICT policies, and for the development of regional policy.‘…during the Africa Regional meeting of the World Summit on the Information Society (WSIS), dubbed ‘Bamako 2002’, the AISI was recommended as the cornerstone to Africa’s entry into the global information society…A number of pre-conference workshops held with partners helped shape an Africa-specific agenda including the role of African languages and cultural diversity as the continent’s input into the information society. A Bureau has been established since Bamako 2002 to take the recommendations forward through to the process for the WSIS. These initiatives were conducted under the framework of the AISI. It is clear that the AISI still has a lot to accomplish as Africa moves towards an information society where access is guaranteed for all.’

Upstream Infrastructure, and Downstream Internet Users

‘International Internet bandwidth has expanded substantially - up over 100%, from 700 Mbps of available outgoing bandwidth in 2001 to 1,500 Mbps in 2002’ says Mike Jensen, Independent Telecommunications and Internet consultant, in his chapter on Internet infrastructure. ‘There are a variety of reasons for this substantial growth, most notably: the increasing use by Internet service providers (ISPs) of low bandwidth via satellite to augment their existing links, the greater demand by a maturing user-base for more bandwidth (including for VoIP), growth in use of public access facilities (cybercafés, business centres) and also because of the lower pricing for bandwidth created by new supplies from satellite providers and the establishment of the new Sat-3/WASC submarine fibre cable along west Africa.’

• Regional Fibre Projects. Chapter 5 looks at existing and proposed regional fibre projects. ‘When the Sat-3/ West African Submarine Cable (WASC) and South Africa – Far East (SAFE) cable entered commercial service at the end of May 2002,' notes Paul Hamilton, the Editor and Contributor to the report, 'they brought an extra 30 Gbps of international capacity to alleviate the bandwidth demands of African carriers, operators and Internet service providers (ISPs). At least one other undersea (‘wet’), and four overland (‘dry’) regional fibre projects are also in the pipeline, which promise to overcome the shortfall of bandwidth to carry international voice and Internet traffic. However, the crux of such projects lie in their economic viability, and how they can recoup the huge investment required’.

  
  Source: African Infrastructure and Service Report 2002/03, Chapter 5

• Satellite. Chapter 6 looks at the continued dependency on satellite for international bandwidth, at new services which are becoming available, and at the changing structure of the satellite service provider’s market. ‘Nearly all of Africa’s international bandwidth is provided by satellite. Except for those countries which are connected to and utilising submarine fibre-optic cables (Algeria, Djibouti, Egypt, Morocco, Senegal, South Africa, Tunisia, Canary Islands and Cape Verde), satellite presents the only means of carrying international traffic other than links they might have with immediate neighbours… As a result, African countries have a very high dependency on satellite: in the majority of countries more than 95% of international traffic carried by satellite’.

  The existing satellites above Africa are heavily subscribed. There is simply not much capacity left, and it is increasingly difficult to lease capacity on them. However, new satellites are being launched - notably Intelsat 903 launched on 30 March 2002, New Skies Satellites (NSS) 7 on 16 April 2002 and Stellat 5 in July 2002.

‘There are three key business factors that will affect the growth of the Internet in Africa: the cost and availability of technology, the price of access and the availability of content (and services) relevant to African users,’ points out Russell Southwood, Chief Executive of Balancing Act in his chapter exploring the "Strange case of the missing Internet content". ‘Of these three factors content (and services) is arguably the most important. If the Internet does not have any ‘use-value’ for African users then it will remain a marginal technological curiosity that is in no way central to anyone’s life. But if content is really so important why is there so little of it in existence?’

‘The rates of [Internet] growth seen in the 1990s have slowed in most countries as the bulk of the users who can afford a computer and telephone have already obtained connections,’ says Mike Jensen. ‘As of mid-2002 the number of dialup Internet subscribers was close to 1.7 million, 20% up from 2001, mainly bolstered by growth in a few countries such as Nigeria.’

New Service Offerings

The report examines a number of new service offerings, which have the potential to unlock African communication markets, including:

• Voice over Internet Protocol (VoIP). Chapter 3 provides an overview of the fixed-line, including the privatization of PTOs, the introduction of competition, and the increasing legal and illicit use of Voice over Internet Protocol (VoIP). ‘The use of Internet Protocol (IP) Telephony in Africa has long been an open secret,’ notes Paul Hamilton. ‘Seeing the opportunity to bypass the extremely high prices charged for international calls, a number of small, informal and illegal operators exploited this opportunity and undercut the public telecommunication operators (PTOs). In Africa, industry sources estimate the extent of this grey traffic to be between 10% and 70%, depending on the country. However, an increasing number of African PTOs are themselves using VoIP to carry international traffic. Ironically, service providers such as iBasis, ITXC and Gateway IP point out that PTOs can use IP telephony as a defence against illegal bypass to recapture the illegal traffic. Without the caller ever realising it, an increasing proportion of PTO calls flowing into and out of Africa now travel at least part of the journey using IP’.
• Mobile Data. Chapter 4 charts the growth of mobile in Africa, and concludes by mobile data applications which are entering service. ‘In the developing world, mobile data services built over the existing GSM platform bring the possibility of Internet access to places within cellular coverage that it would not otherwise reach for decades. In Africa, the lack of fixed-line data infrastructure (not just as voice) is one of the main reasons for holding back the development of the Internet. A number of operators circuit-switched data (CSD), one operator has deployed high spped circuit switched data (HSCSD) and a number are deploying general packet radio services (GPRS). For the time being, the majority of African mobile operators have yet to make the investment into mobile data technologies, concentrating first on the voice market and uncertain of the commercial viability of mobile data. Increasingly though, some operators are using other platforms to deliver information services through existing second generation (digital) mobile phones – including short messaging service (SMS) and Interactive Voice Response (IVR) services.’
• Free ISP. Chapter 7 provides a detailed status of the Internet in Africa, and also looks at the early adopters of the free ISP model in Africa. The free ISP model represents a symbiotic relationship between ISPs and PTOs. Elsewhere, fixed-line carriers have been willing to share a proportion of the extra revenue brought by additional incremental traffic that free ISPs generate, since users dialling up to free ISPs create larger phone bills. ISPs effectively create much larger demand for minutes to be supplied by PTOs. Vice versa, the ability for ISPs to waive subscription charges has allowed them increase the size of their potential market, and also undercut rival ISPs. Elsewhere in the world, the model has powered the growth of Internet in much the same way that pre-paid billing has done for mobile usage. So far, only four African ISPs have launched free ISP services – and two of these have been without a revenue-sharing agreement with the PTO.

Resources:

The African Communications Infrastructure and Services Report 2002/03 can be obtained from AITEC (see below). The report also contains a CD-Rom with full electronic copy of the Africa Connectivity Model, and a supporting library of satellite footprints, regional fibre projects and telecommunication indicators.

• AITEC http://www.aitecafrica.com


• For further information email michelle@aitecafrica.com