 | Issue: | Africa and the Middle East 2006 |
| Article no.: | 9 | |
| Topic: | Universal broadband – can it pay in Africa? | |
| Author: | Michah Himmelman | |
| Title: | Founder and President | |
| Organisation: | MaxBill Ltd | |
| PDF size: | 100KB |
About author
Michah Himmelman is the Founder and President of MaxBill Ltd. Mr Himmelman, with over 20 years of experience in software design and development in the financial and billing arena, directly oversees the company’s product development focused upon mission-critical, Internet-enabled, enterprise software solutions. Prior to founding MaxBill, Mr Himmelman worked as a subcontractor and as an independent software consultant for a number of companies. Mr Himmelman has created diverse products for a variety of fields including Customer Care and Billing, corporate financial applications, cardio-pulmonary exercise testing analysis software, on-line and rule-based facility security software, a traffic planning system, network communication protocols, mediation software and artificial intelligence technology development.
Article abstract
Broadband promises to bring great economic and social benefits to Africa. Traditionally, wired broadband connections to computers linked them to the Internet. In Africa, though, few workers earn enough to buy a computer, let alone pay for the service. On the other hand, mobile phone ownership and usage has grown dramatically in recent years and the cost of broadband enabled mobile handsets is shrinking. Broadband’s growth in Africa, then, may well depend upon the availability of affordable broadband enabled mobile handsets.
Full Article
In recent years, several African countries have experienced triple-digit Internet usage growth rates, including the Ivory Coast, Morocco, Senegal, Sudan and Tanzania. This trend is expected to continue in 2006. While in 2005 only 2.6 per cent of Africa’s population was connected to the Internet, within a year, the density has doubled. Still, there are some problems hampering Internet growth. Leaving political instability aside, many African countries lack proper telecommunications infrastructures. Africa has poor fixed-line coverage and the cost of improving the infrastructure often cannot be met. In an effort to improve the situation, most countries have embraced privatization of their government controlled telecommunications monopolies and have reformed their regulatory structures. The privatized telecommunication companies, then, are required to bear the cost of bettering the country’s overall communications – a necessity for strengthening a country’s economy, its education, health, and security services, government efficiency and social benefits. Broadband offers an improvement, an easier and more cost-efficient way of upgrading the communications infrastructure. However, there are certain prerequisites to implement and profit from broadband. In addition to a proper infrastructure, broadband, for most uses, requires a computer – something most people in Africa do not own. Each computer with an Internet or e-mail connection in Africa supports, on average, three to four users. Unlike other countries, where computers are a privately owned commodity, most computers in Africa are in educational institutions, government offices or, in some cases, in public Internet cafes. The reason for this is simple, according to Computers for Africa, a non-profit organization working towards bringing refurbished computers to Africa; the average person in East Africa earns a daily wage of approximately US$1, while the cost of a computer is the same as outside Africa. In addition, only half of the available computers have Internet access. Of what use is broadband if there are no computers? Due to the low literacy rate in English and/ or French, a huge percentage of the African population falls short of the mark for actual broadband usage. UNESCO has implemented several programs to address this issue, by making computer literacy programs available in African schools and NGOs, and assisting with software programs that will enable the set up of content in local languages. Not only are basic programmes required to educate potential end-users, there is also a lack of trained professionals to set up and maintain telecommunication systems. These difficulties are aggravated by the fact that the salaries paid to even the most basic telecommunications technicians are often higher elsewhere outside Sub-Saharan Africa or even Europe. While literacy issues of end-users and availability of trained professionals may be remedied with time, the lack of computers coupled with poor infrastructure remains. So what are the prospects for the broadband market? Due to poor fixed-line coverage, Africans have quickly embraced mobile networks. Mobile telephones account for 85 per cent of all African telephone subscriptions. Africa now has more than 120 operational mobile networks. According to RNCO, a market research firm, Africa’s mobile phone subscriber base rose 66 per cent, while Europe’s grew by only 11 per cent. According to RNCO’s study, 378 million Africans are expected to own a cell phone by 2011. Only 23.6 million Africans access the Internet, but there are already 135 million mobile phone users. Recent mobile telephone handsets can access wireless broadband, and the cost of handsets with broadband access is dropping rapidly. Accordingly, the logical inference, and more economical step, is to use mobile phones, not dedicated computers, for broadband access in Africa. It makes more sense for Africa to bypass the ‘wireline stage’ and the necessity of a computer altogether, and use only one device – a more economical device – to give people access to both telephony and the Internet. Worldwide Interoperability for Microwave Access, WIMAX, is the future for Africa. It is the latest and most hyped generation of fixed wireless technology, and is poised to provide a solution to the major impediments to wireless fidelity, WiFi, namely standardization and range. WiMax was launched as a potential alternative to fixed broadband services. However, the lack of standards and commercially viable consumer equipment has not yet enabled its full development for mass-market deployment. The development of a fourth generation, 4G, solution, combining mobile phones and wireless broadband technologies will be able to address markets such as wireless data, telemetry, radio frequency identification -RFID, and a range of other new services that will emerge based upon 4G technology. One has to keep in mind that, while the market is wide-open with many first time users, most customers cannot afford to buy high-end phones or replace them very often – the market calls for a simple, affordable device. One service, in particular, will be of importance for Africa, voice over internet protocol, VoIP. The great number of expatriates, migrant workers or even refugees, generates disproportionately high levels of international call traffic compared to those expected given the generally low local income levels. VOIP will bring down the traditionally high costs of telecommunications. Although local providers often try to erect barriers to restrict or disable the end-user from accessing such services, the use of VoIP is growing. The telecom operators themselves, recognising the economic advantages, are using VOIP as a transport layer on their international links working through joint ventures with international VOIP companies. Mobile phones bring the informal sector opportunities to generate income. Business contacts are maintained, orders are taken, and sales are made via mobile phones. In Africa, where credit cards are, for the most part, non-existent and bank accounts rare, Smart Cards as used in South Africa, give a telephone subscriber credit that can be used not only to place calls, but to pay for data transfers or even pay for merchandise. Basic mobile data applications, such as the Wireless Application Protocol, WAP, are offered to mobile phone subscribers in most parts of the world providing them, among other things, with news. With broadband, television content over mobile devices will certainly grow in importance. Much of the world regards radio only as a musical content source for teenagers. However, radio is by far the most dominant mass medium in Africa. Radio stations with trained personnel are widely available throughout Africa, and can transmit an ample range of content to illiterate populations in local languages. Accordingly, it may be worthwhile to consider using bandwidth to provide rural populations with specific content. Radio content on demand via mobile broadband may prove to be an especially valuable way to deliver health information or professional training. This year, the installation of fibre optic cables around Africa should be completed, offering the region additional opportunities to access broadband services. In addition, the African continent is already covered by high speed Internet via Satellite access systems. Whether broadband is provided via a fixed line, like in Morocco where, as of this year, 95 per cent of Internet users are ADSL subscribers, or via wireless satellite transmission to mobile phone handsets, there is immense growth potential. Few studies have been conducted of rural versus urban users, but one can assume that users in cities vastly outnumber rural users, due to the existence of educational centres with computer access, higher literacy rates and electrical access. However, many countries now have points of presence in some of their secondary towns. In addition, several countries have tried to promote Internet use by offering local call charges for all calls to the Internet provider, regardless of distance. The Seychelles has gone even farther; the rates for calls to the Internet service provider are set at half the price of regular local voice calls. The success is incredible. The Seychelles has a 25 per cent Internet user penetration which, together with French Reunion, is the highest in the whole of Africa. However, in its drive for technical modernization and for links to global broadband networks, Africa is facing serious problems with fraud. Thus, fraud management and revenue assurance are of utmost importance to local companies. Telecom fraud has been identified as the single biggest cause of revenue loss for operators and service providers. In Africa, carriers report write offs of fraud losses amounting to as much as US$700 million annually. As mobile penetration in Africa increases, so does fraud risk; with new services like 3G and VoIP, the opportunities for fraud are increasing and fraud attacks and scams are becoming increasingly sophisticated. Indeed, the fraud problems in the field have drawn much attention, and the Telecoms Fraud-Africa 2005 conference in South Africa attracted the fraud and revenue assurance managers from mobile and fixed operators in 17 African countries. The needs are such, that a follow up conference on the issue was held between May 29 and June 1 of this year in Johannesburg. To cope with fraud, a system is required that can identify potential fraudulent events and situations. Such systems provide early warning in potential revenue leakage and fraud situations, detect actual revenue leakage, provide prompt notification to the relevant fraud and revenue leakage personnel within the respective provider, pro-actively handle potential customer complaints, and pre-emptively handle exceptional conditions. A combination of several elements is needed to resolve these problems. These include software applications to control, monitor, and profile and alert the end user, software modules that are capable of rating usage records, as needed, independent of a provider’s current rating capabilities, and the ability to add-on and integrate hardware components such as probes or sensors that trace and detect suspicious call activity. Having the necessary systems in place will ensure that future services offered by telecommunication service providers will start in the right direction and, where possible, in accordance with an optimized business case. The promise of broadband in Africa extends far beyond the service providers’ inevitable financial return; it is broadband’s potential as an educational and social tool, and as a means to support local businesses and build the regional economy, that promises to be the true success story.
