In just ten years, Africa has gone from almost relying almost solely on satellite connections to the rest of the world, to a blooming ecosystem of undersea cables that are changing the way almost

everything is done.

When the SAT-3/SAFE cables came online, in 2001, their design capacity of 120Gbit/s and 130Gbit/s was projected to be more than enough for the coming years. In fact, the long-awaited SEACOM cable, which went live in 2009, only has about 110Gbit/s lit up – or made active – of its total 1.28Tbit/s capacity. But are these design capacities, and current utilization, indicative of the demand? The past few years have seen some fantastic activity along the African coastline. While the rest of the world surged ahead, bolstering infrastructure with fibre-to-home offerings and investing in cross-Atlantic links, the African continent hobbled along on hamstrung international connections. Slow link speeds provided little incentive for telcos and governments to offer faster connectivity options, which saw little progress in the early 2000s. This was also not helped by exceedingly expensive bandwidth costs on the ageing SAT-3/ SAFE link – monthly costs for 1Mbit/s block could be up to 50 times more expensive than a similar link in Europe or North America. However, when SEACOM landed in 2009 it was hyped to be the solution for Africa’s Internet requirements. This fast, open link running along the continent’s Eastern coast was the first major new cable in about 8 years, and spearheaded the arrival of cables we’ve heard more about, since then. 2009 saw two more cables: LION, a 1.28Tbit/s system linking Madagascar, Réunion and Mauritius, and TEAMs, a 40Gbit/s direct link for Kenya to the Middle East. The U n c l u t t e r e d Cables following year saw three major links go live. MainOne is another 1.28Tbit/s cable running from Spain, along the hump of Africa, and terminates in South Africa. EASSy (3.8Tbit/s) comes down along the East coast, from Sudan to South Africa. MainOne is supplemented by a different cable system, GLO1 – a 640Gbit/s link that runs from the UK all the way to Nigeria. Later this year will see the arrival of the biggest fibre link, yet. The 5.12Tbit/s WACS undersea cable is scheduled to go live. It will link South Africa, Namibia, Angola, DRC, Cameroon, Nigeria, Togo, Ghana, Ivory Coast, Cape Verde and the Canary Islands with Portugal and the United Kingdom. Despite its high design capacity, it’s expected that only a fraction of this will be made available at first. Joining WACS is the EIG (Europe Indiage Gateway) cable. Despite its name, this 3.84Tbit/s cable will shore in Libya, Egypt and Djibouti. Later in 2011 the SEAS cable will link the Seychelles to Kenya, for access to its outgoing cables. It’s clear, then, that the last two years have brought a surplus of connectivity to Africa. Most of the cables mentioned are running below capacity though. African countries are equipped with the backhaul capacity to bring the world to their doorsteps, and offer both businesses and citizens with fantastic, high-speed access to the growing pool of information on the Internet, but there are still major obstacles to be overcome. Each country has its regulations and rules that determine how telecommunications operators may go about their business. Stephen Song, a South African broadband activist, says, “The biggest challenge we face with all these multiterabit cables is stimulating effective competition in national distribution of international bandwidth.” It is up to the governments and regulatory bodies in developing countries to make sure that they nurture an environment where growth will be promoted. Regulations need to change swiftly, to accommodate the rapid adoption of new technologies. Song adds, “Both Seacom and MainOne have been stifled by incumbents who own the national backbone infrastructure and have not bent over backwards to be helpful because of their interests in other cables.” Companies that are stakeholders in existing, older cables stand to gain more from sticking to the bandwidth or services from that connection, rather than forking out cash for capacity on an alternative solution – especially if there’s no need to. It also highlights how the success of an undersea cable is dependent on a healthy backbone infrastructure. Stephen goes on to say, “Governments face the challenge of addressing the clear strategic need for investment in national fibre infrastructure without disincentivising industry investment. Getting public-private partnership right in this area is essential.” How this is approached is not set in stone. A one-sizefits- all solution cannot be used, especially with drastically different economical and geographical factors playing a role. One country might need a full wireless deployment to reach communities in far-flung areas, where it may be uneconomical to deploy fibre or copper cables. Another country could be more suited to the conventional cable deployments. In both cases it is up to the governments, with the regulations they’ve put in place, to help promote the technologies. Once the stage has been set, it will be up to telecoms operators and ISPs to toe the line. How will they make better use of the bandwidth that’s being provided by the undersea cables? What sort of offers can made available to users, to promote usage of the services? It’s all good and well if we’ve been given unlimited high-speed Internet access, but after we’ve browsed a thousand sites and checked all our free e-mail accounts, what is left to do? Assuming a metropolitan area has had its roads dug up and an extensive fibre network has been constructed, with the co-operation of all parties that stand to benefit, they will want to start looking at ways of making that investment work. One of the best value-add propositions is a triple-play offering. Traditional use won’t see home users saturating a 50Mbit/s fibre link with regular Internet usage on two computers. But present consumers one link, with a fixed price and multiple services, and things start making more sense. A portion of that downlink can be dedicated to browsing and high-speed download services, while the rest can be reserved for additional services. Highdefinition digital TV can be delivered on a fibre connection, and internationally there are many established services offering video entertainment over an Internet connection. In the US, services like Netflix and Vudu provide on-demand streaming of full-length movies, while Hulu is a free solution that cable TV subscribers can use to watch television shows online. The examples cited are US-specific, but show how an open market and highcapacity local loop can provide more business opportunities. Internet subscribers may not have paid a telco more for the privilege of consuming entertainment, but they’re happy to pay a separate content provider a reasonable subscription fee for guaranteed entertainment. The third component of this triple-play solution is voice. There are already hardware voice-over-IP solutions that just require an Internet connection to replace analogue voice equipment. Marketing this as a cheaper solution for calls will see people use the service more often. Telcos can also remove themselves from the direct retail chain. Rather than monetizing and managing a number of services, they should see themselves as a provider of a raw material – bandwidth – while a middleman takes care of packaging and selling the product. Even in the example of a triple-play solution, an operator can give consumers the choice of who they’d like to provide e-mail, video and voice services. In essence, they can go wholesale. Let’s say a telecoms operator has a data centre with huge data capacity. They don’t have to deal with a consumer customer base, but instead let out the capacity to smaller companies that are willing to be facilitators. A video streaming service can choose to set up customer operations and a call centre, while it pays for servers and bandwidth, without having to worry about maintaining the hardware or infrastructure. The more successful the video service, the more servers and bandwidth it has to pay for. It’s a mutually beneficial relationship. One example of where triple-play has already been deployed is Kenya, through Zuku. At its most expensive, with 82 English TV channels and an 8Mbit/s Internet connection, this fibre service costs home users less than US$70 a month. Zuku’s coverage map for fibre-to-home is very limited, but it’s a great example of fast deployment and value-added services. Stephen Song also points out how certain countries have immediately recognised the strategic importance of national broadband, citing Rwanda and Kenya as examples. He says that these countries have quickly realised what is needed, and those results are now being seen. He points out that South Africa, one of the continent’s strongest economies, has sacrificed its leadership position in this area because there is no one politician or company championing the cause for highspeed Internet. It boils down to the fact that the Internet isn’t just there for watching YouTube videos and browsing websites. There are a number of services and devices that offer content to an increasing number of smart devices. High definition televisions are now being equipped with technology that will make it possible to access services like Skype, Flickr and Picasa. In jurisdictions where it is offered, video services are bundled with the TVs. The most important feature of a smartphones is no longer how it handles phone calls and text messaging, but how well its data services and application ecosystem perform. Surveys consistently show smartphone users to use more data than users of regular phones, something that is made possible by having better access to the Internet. Even more traditional services are now in need of fast, reliable Internet access. Hotels, coffee shops and conference venues can lose a customer just on the basis of wireless access. People do not want to be limited in how they use the Internet, and if more venues can affordably offer these services, the ultimate usage will escalate and the company running the cables will see more traffic – which means more money. Looking back ten years, Africa now has more than 30 times the bandwidth it had in 2001. Technology’s also become a lot cheaper, and consumers smarter. It’s been pointed out many times before that the lack of legacy infrastructure in many African countries makes it easier to adopt newer technologies and rapidly deploy them. At the moment, the biggest hurdles we face are anticompetitive practices and ageing regulations. Broadband has become a necessity, rather than a luxury. Governments can use Internet access as a tool to educate people and create a skilled workforce that will draw foreign investments. International companies no longer need to import talent, but should be able to draw from a local pool of experts, adding true diversity. Jobs can be created by having an open resource that is fairly regulated and policed – entrepreneurs should not need to worry about the insurmountable obstacles and red tape, should they decide to start an Internetbased venture. Be that venture to supply information and entertainment, or setting up a cable or wireless infrastructure for connecting citizens to the fast-expanding online world.

Satellite's here to Stay

With the wealth of fibre optic cabling being laid along Africa's coastline and the array of projects underway to connect landlocked countries to cables such as SEACOM, EASSY and WACS, you'd be forgiven for predicting a swift departure of the satellite communications services that have connected Africa to the rest of the world for so long. However, in reality, satellite technology isn't going

anywhere. As fibre becomes a more prolific part of Africa's infrastructural landscape, so the usage model for satellite will merely change.

Fibre’s cheap … well, cheaper than satellite. And with all the fibre being laid – both undersea and at a local level – satellite will soon be on its way out. Right? Wrong! Scott Sprague, Senior Vice President of Global Sales at SES says that today satellite is still an intrinsic part of the communications infrastructure of countries in the developing world, regardless of how much fibre they have in the ground. The difference is, where those countries classically relied on satellite for point-to-point communications, now fibre – a far more cost effective way of providing point-to-point connectivity – is the favoured technology. And satellite has moved onto other applications. “When I joined SES 10 years ago, fibre connectivity was making its way into the Indian market and the same predictions surfaced,” Sprague explains. “Instead of satellite disappearing however, the business model changed from one that was focused on point-topoint applications, to one that favoured point-to-multipoint applications. “Fast forward to today and we’re doing more satellite business in India than ever. The only difference is the business model,” he says. Sprague believes the same will be true in Africa over the coming decade. After all, it’s no secret that fibre cabling is more competitive on a cost per megabyte, point-to-point basis. And similarly, nothing competes with the cost efficiency satellite can offer in point-to-multipoint applications, such as Very Small Aperture Terminal (VSAT) and Direct-to- Home TV. But, when you’re faced with an expensive solution versus no solution at all, the expensive solution is better than nothing. And with a dearth of better options on the connectivity front, satellite has been somewhat of a godsend for Africa.

Perfect for failover

Aside from satellite beginning to take on a role that’ s more centred on point-to-multipoint applications, Sprague says that satellite will continue to be a valuable failover for fibre connectivity. “Because it’s not quite as reliant on other infrastructure (such as electricity supply) as fibre optic networks are, satellite tends to be more reliable,” Sprague says. “And this in turn makes it a perfect backup solution for a fibre backbone,” he says. A great example of this in practice, Sprague says, is French Polynesia where satellite technology was  the islands together.  “When a large fibre cable was run to the main island, there wasn’t any real need for the satellite to stay in service, but instead of it going away completely, the satellite technology was kept around as a failover,” he says. “And considering a failure in the fibre cable results in all communications being interrupted, the satellite has been used from time to time,” he adds.

Direct-to-HOME TV

Looking at the future, Sprague says there’s very little that’s capable of competing with satellite when one considers an entire continent like Africa can be covered with a single beam. “It’s easy to deploy, cost effective to manage and above all, reliable,” he says. And this is the primary reason Sprague says that SES currently has six customers in the Direct-to-Home TV space today. “While they’re still in the early stages of their development, there’s interest in increasing the number of Direct-to-Home TV services available within both regional markets and the pan-African market,” he says. And one of the most interesting changes this has effected in the market as a whole, Sprague says, is the amount of TV content being developed in Africa, and being consumed in Africa. “Three or four years ago, Africa was pulling the vast majority of its content from other parts of the world. Now there’s a wealth of content being developed on the continent, for consumption on the continent,” he says. And history shows that this is only the start. As more consumers get their hands on the technology and devices begin making their way into the hands of the man in the street, this will scale upwards at a blistering pace.

Banking, rural telcos and more

Outside of entertainment, Sprague says SES looks after a number of banking institutions throughout Africa that rely heavily on the star configuration of their multipoint network when it comes to providing the backbone for very data intensive applications. “Here we use satellite as the main mechanism for pushing and pulling large volumes of banking data from branches,” he says. The same applies when it comes to enabling rural telco networks for villages throughout Africa. Satellite provides an asymmetrical link, so it’s perfect for applications, such as browsing the Internet and downloading media, since the requests for the download are small but the downloads are exponentially bigger. Sprague says that there’s also strong opportunity for satellite when it comes to providing services to mobile telcos, especially if one considers the strong push underway for triple-play offerings in Africa. “Mobile telcos are looking at hybrid networks that consist of both terrestrial and satellite infrastructure in providing for their customers,” he says. “Also, this is often not just about companies that exist inside Africa,” he adds. “In many cases we’re engaging with service providers outside of Africa – most commonly, from India and China – that are looking to take advantage of market dynamics here,” he says.

Still a fibre competitor

Satellite’s better suitability to point-to-multipoint doesn’t mean it’s completely out of the ballpark when it comes to point-to-point applications, however. SES’s work with O3b Networks and its fleet of low orbiting satellites makes satellite a strong competitor to fibre. O3b’s focus on a specific geographical area and the fact that coverage can be easily moved or reconfigured  as needs dictate makes it far more versatile than fibre. “Add to that the fact that some geographic regions and their harsh terrain just don’t lend themselves well to the rollout of fibre and it’s clear that low orbiting satellites have an important role to play,” he says. Sprague says the challenge for satellite operators is to keep costs as attractive as possible, while simultaneously replacing their assets often enough for reliability to be maintained. “It’s a balancing act,” he says.

Onwards and upwards

Sprague says that SES sees a bright future for satellite on the African continent and out of the six launches it has scheduled for this year, two will be dedicated to Africa. That will increase the number of satellites it has servicing Africa from seven to nine, on the backdrop of a current fleet that consists of 44 satellites in 30 orbital locations and will consist of 50 satellites by the end of this year . At the end of 2011, 18% of SES’s satellite fleet will be dedicated to servicing the African market. Outside of putting new satellite capacity in the sky , Sprague says that SES is increasing its focus on the ground too. It plans to add offices in East and South Central Africa to its office in South Africa over the course of the year. “In reality, Africa consists of 52 very interesting and different markets with varying demands and opportunities,” he says. “We are increasing our on-the-ground presence so it can understand these dynamics and stay close to our customers’ needs. We believe in understanding our target markets and that too many multinational companies have made the mistake of managing all of the countries within Africa in the same way. There’s a ton of opportunity for companies that are able to adapt to changing market conditions and assist their customers in their endeavors for growth. We’re aiming to be one the companies at the core of that phenomenon,” Sprague concludes.

Market introduction

For the purposes of this article, West and Central Africa refers to Nigeria, Côte d'Ivoire and Cameroon. West and Central Africa is one of the richest regions in sub-Saharan Africa, with most of the countries being oil, mining and agricultural exporters.

• Nigeria, Côte d'Ivoire, and Cameroon are oil exporters and home to dozens of mining companies.

• Nigeria is the third largest African economy in terms of GDP after South Africa and Egypt.

The three countries had GDP per capita (PPP) of more than $1,500 in 2010, higher than the average of $1,000 in sub-Saharan Africa. Moreover, all three countries have outstanding literacy rates, more than 60 percent in 2010. This, coupled with high GDP per capita, is an indication that higher end-services, other than voice, can easily be adopted by the population. That said, these countries still face high levels of corruption and regulatory challenges that hamper market growth in terms of telecommunications services. Unlike Cameroon, Côte d'Ivoire and Nigeria are connected to three undersea cables: Main One, SAT-3 and Glo-1. These countries also expect the landings of other undersea cables such as the West Africa Cable System (WACS) and Africa Coast to Europe (ACE) in 2011 and 2012, respectively. The landings of these undersea cables have started to have a positive impact on the telecoms sector, with the reduction of wholesale bandwidth costs. This situation has led to the introduction of advanced applications such as unified communications and IPTV. Moreover, the landings of these cables have triggered the deployments of terrestrial fibre-optic backbones by mobile operators in Nigeria and Côte d'Ivoire. For example, MTN Nigeria and Globacom have rolled out nationwide fibre-optic cable backbone in Nigeria. In 2009, there were approximately 92.6 million mobile subscribers in the three countries, representing a mobile penetration rate of 40 percent. This indicates that there are still growth opportunities in the region, especially in rural areas. MTN and Globacom remain the largest mobile operators in the MTN - 44.4% Globacom - 18.9% OTHERS - 21.1% ZAIN - 15.6% Mobile Penetration Rate (%) 0.0 5,000.0 HIGH 0.5 LOW GDP Per Capita ($) Cote d'Ivoire Cameroon Nigeria three countries, with 44.4 percent and 18.9 percent market share, respectively. However, with the acquisition of Zain by Bharti Airtel, the competitive landscape is expected to change in Nigeria. Frost & Sullivan expects that Airtel is likely to increase its market share in Nigeria in the next five years, thanks to the implementation of its Indian model. This model of Airtel's has started to bear fruit in Kenya where the company has managed to chip away at its competitors' market share. Moreover, CDMA operators have been losing market share to GSM operators in Nigeria. This is mainly due to the lack of economies of scale. In response to this downward trend, CDMA operators should focus on mobile broadband services and complement their product offerings with GSM services. The mobile market generated US$8.6 billion and is expected to reach US$12.6 billion, growing at a CAGR of 5.6 percent from 2009 to 2016. The healthy growth rates can be attributed to an increase in mobile data and subscriber acquisition revenues as mobile operators initiate several new data tariff plans to boost their overall revenues.

Regulatory and infrastructure overview

The level of telecoms deregulation varies among the three countries, with Nigeria being the most liberalised. Other factors include:

• Nigeria has introduced a unified licensing regime.

• No monopoly on intercity fibre-optic deployments is present. • Nigeria is on the threshold of implementing mobile number portability.

• Unlike Cameroon, mobile operators are allowed to deploy intercity fibre-optic backbone in Côte d'Ivoire and Nigeria.

• In Cameroon, mobile operators are only allowed to roll out metro fibre-optic backbone. • Only the incumbent Cameroon Telecommunications (Camtel) is allowed to build nationwide fibre-optic backbone.

However, in Cameroon, the regulator has drafted a new ICT bill that will put an end to this situation. This bill is expected to come into force before the end of 2011. Only the Nigerian Communications Commission (NCC) has a clear policy on mobile number portability (MNP) in the region. The NCC is expected to implement MNP before the end of 2011. This implementation is likely to boost competition in Nigeria's telecoms sector and subsequently mobile operators are expected to provide enhanced services to their customers. Similar to other sub-Saharan African countries, there remain little or no competition laws and this lack of regulations has led to anti-competitive behaviour among the telecoms operators. Currently, competition-related issues are handled by telecoms regulators. There are interconnection regulations in these countries. NCC has recently introduced asymmetric interconnection rates, while regulators enforce symmetric interconnect rates in Cameroon and Côte d'Ivoire. Small market participants and new entrants are expected to benefit from this new interconnection regime in Nigeria. Mobile operators have deployed nationwide 2G/2.5G networks in these countries, whereas 3G/3.5G and WiMAx networks are still limited to major urban cities.

West and Central African market development and trends

To mitigate decline in revenues from voice revenues, mobile operators have started to provide mobile money services to consumers in Côte d'Ivoire and Cameroon. These offerings are expected to help mobile retain customers and sustain profit margins. This is likely to remain the trend in the next five years in these countries as Nigeria's Central Bank has issued licences for mobile money services to mobile operators. Another key trend is the moving of mobile operators in the broadband space in these countries. Unlike in other sub-Saharan African countries, mobile operators in these 3 countries have started to play aggressively in the broadband market. To this effect, these mobile operators have acquired ISPs and built data centres to cater to the lucrative corporate customers. Moreover, mobile operators have been outsourcing the management and maintenance of their networks to third parties. This is mainly observed in Côte d'Ivoire and Nigeria, where mobile incumbents closed outsourcing deals with vendors such as Nokia Siemens Networks and Helios Towers Africa Limited. Due to the lack of xDSL infrastructure and other alternatives, 3G and 3.5G networks are expected to become primary access technology for the Internet. Mobile operators are expected to deploy 3G and 3.5G networks in Cameroon and Côte d'Ivoire by 2012, due to high demand for mobile broadband services.