|Issue:||Africa and the Middle East 2015|
|Topic:||The growth rates for ultra-broadband and cloud vary across the Middle East and Africa, but opportunity is found everywhere|
Willem Hendrickx is President of EMEA (Europe, Middle-East and Africa) Operations at Alcatel-Lucent since January 1, 2015, assuming overall responsibility for all sales activities and operational management of company activities in the region.
Willem has more than 20 years experience in sales and management positions at global ICT companies, holding key executive positions in commercial management as well as corporate marketing.
Willem joins Alcatel-Lucent from Riverbed Technology where he served as Senior Vice President of EMEA since July 2011. From October 2010 to June 2011, Willem held various positions at Tieto Ojy, including Executive Vice President of Telecom & Media, and Head of Tieto International; Executive Vice President, Global Accounts, Customer and Market Operations.
Prior to Tieto, Willem was Senior Vice President of global channels and commercial business at EMC, where he spearheaded EMC’s global channel operations. In addition to holding various roles while at EMC, Hendrickx also held leadership positions within Parametric Technology and LCI Computer.
Willem has a degree in Commercial Sciences and a Masters degree in Economics from the European Institute of Higher Education (EHSAL) in Brussels, Belgium.
Willem Hendrickx joined Alcatel-Lucent at the start of 2015 as head of Europe, Middle East and Africa. Today, he is sharing with us his views on the major telecom trends in the MEA region.
What makes the Middle East and Africa region so interesting to me is its richness and diversity in historical background and cultures. Also fascinating is the diversity of its market environments, and the different pace at which the several sub-regions are developing and innovating, showing a lot of creativity and innovation, while at the same time having to deal with multiple socio-economical and political challenges.
The past couple of years, the telecom market in the MEA region has developed and grown much faster than any other region in EMEA. It includes some markets that are amongst the most advanced in the world, like Qatar, the UAE or South Africa, as well as many that are amongst the least developed. As a result, the telecoms infrastructure across this region varies dramatically in terms of sophistication and coverage levels. However, there are four common trends across the region:
• First, competition has increased tremendously among the telecoms operators and monopolies have been removed, at least in the mobile segment. Middle Eastern and African telecom companies also have their sights set on interregional expansion.
• Second, mobile broadband penetration is still growing heavily across the region. 3G is now about a decade old, so to address the considerable pent-up demand for data, most major mobile network operators have deployed and/or are in the process of deploying 4G/LTE networks. In addition to the traditional Mobile Network Operators, you now also see a new breed of “Fixed Wireless Broadband Operators”, which focus on LTE only networks. According to OVUM, mobile data revenues in Africa are expected to almost double over the coming five years.
• Third, we see a different market in the fixed line segment. Many countries in Africa lack a strong established fixed telephony infrastructure. While competition is increasing in the mobile space with penetration beyond 150%, only a few countries in the region have a strong fixed player. On the other hand, we see a number of interesting projects which involve Fiber to the Home – some of them run by the traditional fixed line operator, others by smaller ISP’s which have identified a very interesting niche market here. Again because of the economic disparities among the countries across MEA, this trend masks a large variation between Sub Saharan African countries where fiber is in the early phases of deployment, and the Middle East where more investments are made in fiber optics, for example in Qatar in the run up to the World Cup, or in the UAE.
• And fourth, increasingly, large companies and strategic segments such as banking, transport, energy, and government, are also looking into owning their own mission-critical network infrastructure, to deploy it to their own benefit, as well as provide general or dedicated services to the enterprises or residential customers in their perimeter. They need to assure that their customers, employees or partners get an optimal access to broadband, and need to provide an agile environment for deploying new services to their customers. This trend is clearly happening already in the Middle East, with multiple virtualization projects ongoing, but also in South Africa, which is host to some large Pan-African enterprises, connecting their distributed datacenters.
Ultra Broadband as catalyst for a nation’s wellbeing
“Broadband is as vital as roads, bridges and electricity”, UN secretary general Ban Ki-Moon
Some consider ultra-broadband as the most transformative technology since electricity and one of the most promising assets for governments to boost socio-economic development. According to independent studies, a ten percent increase in broadband penetration can increase a country’s GDP growth rate by1.4 percent or more in emerging regions. Studies have shown that ultra-broadband drives productivity, innovation and growth across all sectors of the economy, and therefore is key to a nation’s competitiveness.
In order to boost economic and social development, most of the MEA governments have placed “Internet-driven growth” prominently on their agenda: many countries have national strategies for developing ICT in general and – in particular – around ultra-broadband – although most of them are still in the early stages of implementation.
But the focus goes beyond ultra-broadband connectivity, such as the public-private-partnership in Senegal involving partners such as the United Nations, the WHO, ITU, several Senegalese government departments, development banks, NGOs and private sector companies in the field of mHealth and mLearning which resulted in the 2014 launch of an ambitious national mHealth project to combat diabetes via mobile technology.
In order to fully exploit the broadband opportunity in MEA markets, service providers must adopt a multi-stakeholder approach. Telecoms operators and vendors need to work together to coordinate the rollout of ultra-broadband networks. In addition, as ultra-broadband is central to economic development, governments are often willing to incentivize its deployment. The following go-to-market strategies are key to build and run these next-generation ultra-broadband networks cost effectively and profitably:
• Deploying national ultra-broadband requires a considerable investment. Increasingly, we see that an ecosystem of public and private players is joining forces to share the cost of delivery ( operators, suppliers, governments, OTT players, etc.). This new ecosystem will return benefits that more than pay for financial outlays. Operators should enter into network sharing deals to spread their costs, and consider active network sharing for larger gains. The mobilization of a strong ecosystem of public and private stakeholders is essential to the success of both implementation and execution of the government’s ultra-broadband strategy.
• At the same time, governments should create a strong environment to boost the demand for consumer and business applications to attract users and monetize the network. Digital literacy is critical for adoption and success, and should therefore be taught in school.
The African telecom market and its potential
The African market has immense potential. We see a huge demand for affordable connectivity, for voice services and for more data transmission and ultra-broadband applications. Over the past three years, the African continent has received considerable international bandwidth through the arrival of submarine cables, with the number of landing points increasing significantly from less than ten to more than 70.
Subsequent to the arrival of the submarine cables, good progress has been made to connect the landing points to regional hubs through terrestrial backbones. But the connectivity to smaller places and rural areas is still poor, in general. The focus will continue to be in the accelerated development of ultra-broadband networks to bring connectivity to everyone including more remote users. We see strong demand for both wireless as well as wireline access for broadband services – GPON and LTE are on the way to become key technologies. Many countries in the Middle East and Africa are boosting the deployment of fiber optic networks, huge capacity optical backbone networks, and in some countries, a fast roll-out of cloud and virtualisation projects, moving the MEA governments, enterprises and citizens into the cloud era.
This connectivity is extremely important providing the basis for services like e-education, telemedicine, e-finance, e-commerce, etc. which will have a major impact on the citizens.
The Africa region also has a number of characteristics that make it fertile ground for mobile-money services. The broader financial services market in many African countries is often under-developed. Many people do not have a bank account, but it is increasingly likely that they will have a mobile phone. That has presented an opportunity for the mobile to fill a gap in the financial-services infrastructure.
Africa’s business market meanwhile is expanding as a result of economic growth and is an increasingly important target for operators, characterized by a large diversity with numerous micro businesses and SMEs, as well as some large corporations. All offer potential growth markets for service providers.
South Africa, one of the most developed countries in the African region, is one of the early adopters of Software Defined Networks. Many large companies with lots of branches – sometimes thousands- in the rest of Africa are looking at easily interconnecting their datacenters, managing them securely (protecting against hackers), virtualising operations so they can set up new branches more quickly allowing them to be more agile, and managing their datacenters from a central location across the whole of Africa. The advantages of SDN are too compelling to put on hold, especially as issues such as agile development, speed to market, compliance, security, data protection and high availability of applications are so critical to business success.
The Middle East and Africa form a region of great diversity and opportunity. The deployment of ultra-broadband networks, the proliferation of cloud-based services, and the availability of the right set of e-services will provide the foundation for broad social and economic benefits. It is our task, as one of the leading telecom suppliers in the world, to help develop these digital economies of the future.