Africa Telecoms chats with Lars Linden, Head of sub-Saharan Africa, Ericsson
Globally, the telecoms industry has been facing rough trading conditions, but Africa seems to be growing from strength to strength. Is there a specific reason for this?
Communication is a universal need. This, alongside evolving user demands and rapid developments in technology, drive continued growth in the global telecommunications industry.
However, a few key factors distinguish demand on the African continent: We have a very young population – about 60% are under 25 years old; limited fixed infrastructure (at) less than 2% fixed penetration; and the potential as a lagging adopter to embrace best practice and leapfrog mistakes of more mature markets.
According to the Q3 Ericsson Financials, the company saw a decline in sales compared to the same period in the previous financial year. Can the same be said for Africa, or is Ericsson’s Africa division still seeing an increase in sales year on year?
On P.9 of the quarterly report for our regional sales overview, you can see that for sub-Saharan Africa the sales increased year on year. It is driven by 3G rollouts and upgrades across the region.
However, 2G rollouts still represent the largest share of global services as well as network revenues. Subscriber and data growth continues, although data grows from a low level.
Ericsson specifically mentions in these results that the decrease can partly be attributed to a decrease in CDMA equipment sales. Is Ericsson going to continue supporting this ecosystem?
The CDMA market is transitioning as operators are deploying 4G LTE business along with their existing CDMA network. We have had an excellent record of delivering Ericsson LTE solutions to our CDMA-installed base and we are working with our customers to support both CDMA and LTE networks simultaneously.
We are delivering on CDMA technology advancements like 1x Advanced, HD Voice, EV-DO Rev B and DO Advanced. In addition, we support CDMA in Ericsson’s RBS 6000 for Sprint Network Vision, so we can consolidate multiple technologies within a single RBS to lower the operator’s operating expenses.
Also, we are delivering a number of capabilities to help our CDMA operators leverage their CDMA investment to effectively inter-work and co-exist with the LTE network (including VoLTE). In summary, we are committed to supporting our installed CDMA base to enhance their network as they transition to 4G LTE.
At the beginning of 2012 Ericsson Labs completed a consumer trends report. Has this report been commissioned for 2013? And can you give us a sneak preview in terms of the content of the 2013 report?
Ericsson ConsumerLab has identified the hottest consumer trends for 2013 and beyond. For more than 15 years, ConsumerLab has conducted research into people’s values, behaviour and ways of using ICT products and services.
The 2013 consumer trends report highlights the 10 trending topics in 2013. Some of the trends include how Cloud-reliance reshapes device needs and how city-dwellers are relentlessly going mobile.
Ericsson is still working in the 2G space in Africa and continues to see a growth in revenue from 3G. Is the company preparing for a jump in revenue from LTE and the number of LTE installations in Africa?
LTE is currently being deployed and built-out in all regions and will reach around 1.6 billion subscriptions in 2018. Ericsson has the largest deployment of LTE networks globally and we continue to anticipate growth across the world and also in Africa as newer devices and services boost demand.
Different maturity levels between regions are reflected in their radio technology mix. Less mature regions such as the Middle East and Africa are dominated by 2G technologies such as GSM/EDGE, while more mature regions like Western Europe are dominated by HSPA.
Today, LTE is growing very strongly, particularly in North America, while Africa is dominated by GSM/EDGE. This is expected to continue, driven by a demand for low-cost telephones. However, the region is diverse, so there will be large differences between highly-developed areas and less-developed areas. We recently announced the commercial launch of two Ericsson networks in southern Africa and anticipate a growth in the demand for LTE deployments in the near future.
In a recent study, Ericsson reported that it does not expect the majority of connections in the Middle East and Africa to be LTE until 2018. Why do you think this is the case?
Uptake of new technologies are broadly constrained by demand economics, compelling services and devices, as well as regulatory and macro-economic feasibility. To put this into perspective: while 2G penetration today is ~75%, 3G penetration is still ~20%.
A major partnership was announced between Airtel and Ericsson in November 2012. Could you give a brief outline of the partnership and its purpose?
The purpose of the programme was transforming Airtel Africa’s networks to meet current and future consumer demands. The agreement covered an end-to-end network transformation and modernisation of networks in 16 African countries.
It involved the upgrade of existing 2G and 3G mobile broadband access and core networks, radio transport, data charging and consumer-services platforms and systems, securing increased network capacity and availability, and preparing the networks for the delivery of next-generation services.
This transformation programme follows the 2011 announcement of an ongoing five-year, multi-country managed services agreement, wherein Ericsson would manage and optimise Airtel’s mobile networks across Africa.
Ericsson is currently embroiled in a patent dispute with Samsung. Do you think the litigious behaviour in the telecoms sector currently is a hindrance to innovation? And what do you think the solution to these patent disputes is for all parties currently embroiled in them?
No, we do not think it is a hindrance to innovation. Ericsson does not comment on the specific litigation cases of others.
In general, these cases highlight the importance of patents and licensing programmes. Patents are an integral part of the commercial ecosystems that can be built on standardised technology; GSM/ WCDMA is a good example. In that ecosystem, companies that contribute to the development of the technology commit to licence their essential patents on fair, reasonable and non-discriminatory (FRAND) terms. In return for this, they get a fair and reasonable royalty. The FRAND regime also ensures that new players can enter the market, get access to the technology and compete with innovative telecom products.
Patents are very important to Ericsson – our substantial R&D efforts over the years mean we now hold around 30,000 patents worldwide. Ericsson is the number one patent holder in mobile telecom. The possibility of getting a fair return on patents through licensing is important to ensure new investments in innovation and the continued success of open standardisation.
Ericsson has been pushing the idea of the “connected society” for some time now. How do you feel Africa is doing in connecting all of these communities? And what could operators and regulators be doing better to achieve the goal of a “connected society”?
The digital revolution has brought the world together, connecting people and their tools to a dynamic global network. In the coming years, ICT infrastructure performance will increase rapidly, fuelled by technology advances.
This will bring new opportunities for people and business to create, learn, sustain and innovate, leading to a positive impact on our world. Ericsson calls this new emerging society “The Networked Society”.
African governments and regulators, alongside operators, have all been involved in shaping the extraordinary mobile world with its amazing infrastructure in which we live today. This present infrastructure forms the foundation of the “smart societies” we are creating for tomorrow.
Government policies and national regulations determine the societal benefits that can be reaped from ICT. They must be responsive to the constantly changing and converging market and business conditions in the ICT sector, meaning that policy and regulatory frameworks must also continue to evolve to reflect these new realities.
Issues that must be handled include market liberalisation and competition, radio spectrum management and availability, network access regulation, digital content and intellectual property rights, privacy and information management and different aspect of cybersecurity.
Ericsson works across most, if not all, markets in sub-Saharan Africa. What do you feel is the biggest challenge facing the region at the moment?
If there’s one major thing holding Africa back it is infrastructure. However, as the continent continues to harness its abundant natural resources and burgeoning workforce, money should become available to spend on ICT, transportation and power grids. This will enable more growth and a virtuous circle would be set in motion. This is what happened in Asia a generation ago.
What is Ericsson’s position on the WiMAX/LTE debate? And are either of them 4G technologies? What do you think constitutes a 4G technology?
The Wimax-LTE debate has to a very large extent faded away. It is apparent that LTE has the big momentum and will be the long- term choice of technology. The term 4G is not a formal definition of technology capabilities but it relates in practice to the ITU-defined “IMT-Advanced”, which defines a number of capabilities.
From 3GPP release 10, LTE fulfills IMT-advanced requirements, hence LTE is an IMT-Advanced-capable technology and can thus be labelled a 4G technology. Further, it should be noticed that, since 3GPP release 11, HSPA also fulfills the IMT-Advanced requirements, and hence HSPA also supports a strong 4G migration path.
IEEE802.16e (Wimax) does not support the IMT-Advanced requirements, but the evolved standard IEEE802.16m does.
However, the current weak industry momentum on Wimax makes it questionable if this technology standard will make it into products.
African operators have thus far not embraced OTT services to their full potential. If you had to guess, why do you think this is the case?
Many operators do promote third-party services such as Mxit, WhatsApp, etc, and the practice of blocking VoIP services such as Skype is less prevalent than a few years ago. However, the low penetration of data services means operators and OTT players can collaborate a lot more to improve the value proposition of their offerings. AT
1. What do you think 2013 has in store for the telecoms industry in Africa?
MVDB – Data demand will continue to grow exponentially, driven by the widespread introduction of 3G mobile networks and the early buildout of LTE. Smartphones will increasingly become the preferred access device of choice for the majority of users across the continent, which will continue to accelerate the growth of mobile data. Content will start to become a major driver, with local content also helping to drive data volumes.
CW – One thing I expect to see is the importance of data services increasingly being recognised by operators across the continent as voice revenues plateau or fall. This will drive further investment in deployment of leading-edge network platforms such as 3G and LTE (long- term evolution), encouraging further uptake and usage of mobile broadband services. I expect this to bring considerable growth in demand for international connectivity, which is exactly why WIOCC, which has invested in linking the largest terrestrial fibre footprint in Africa with its strategic investments in 40,000km of submarine network. It appears that few new licences will be awarded across Africa in 2013, leaving existing telcos to compete in retaining and attracting an ever-shrinking addressable market of attractive customers. We are seeing hints of consolidation in some markets, and I expect this to continue – particularly in markets that are currently supporting a large number of competing operators. The winners will be the operators that can effectively balance falling revenues (due to ever-more competitive markets) against the cost of the investments required to attract and retain a profitable customer base.
JM – Growth, growth and more growth. In 2013 and in years to come, Africa will benefit from increasingly affordable data services, faster data speeds, improved affordability of devices, and a broader choice of applications and services. FGF – We will see data prices continue coming down, meaning we will have a greater influx of smart devices (phones, tablets, etc). We will see the mobile operators invest ever greater into providing smart devices to consumers.
SD – The African market often has different priorities to other regions. What we see going on in 2013 is a lot of mass adoption of LTE, and a lot of significant rollout of small cells. We suspect these don’t solve the African operators’ needs in quite the same way they address other regions. We see challenges around continuing to run businesses where voice, and in particular GSM voice, is still a very valuable source of revenue and profits. With our multi-technology, customer-centric solutions we are still bringing innovative solutions to market that help operators address these challenges, while at the same time helping them understand the experience of their top-tier customers who continue to migrate to smartphones, and 3G and even LTE-capable devices.
NB – The mobile lifestyle has truly been established for a large subset of the African population, and this group will continue to grow over the next year. African end-users are increasingly using mobile to underpin all facets of their lives and, in doing so, are coming to expect much more from their customer experience. They will not be afraid to take their business elsewhere if they believe a better experience can be found.
Mobile service providers must respond to this by enhancing their business processes and network capacity to maintain customer loyalty and grow their businesses in 2013. Traditional challenges for the market, such as a lack of physical infrastructure, will be overshadowed by this need to manage the customer experience effectively.
HVR – Africa was the cradle for mobile financial services. Ten years ago, we launched the world’s first mobile money service for the unbanked with Celpay in Zambia. Since then, Africa has led the mobile money market and now boasts 55% of the world’s services (Mobile Money Tracker, GSMA, 2012). 2013 is set to be another exciting year for the continent. We expect to see continued accelerated growth across Africa. A great deal of attention will be focused on Nigeria, which has enormous potential. Only 38% of the country’s 160 million people have access to formal financial services (Gallup and NOI-Polls, 2010). Meanwhile, there are more than 93 million mobile phone subscriptions in Nigeria, the most in Africa (GSMA, 2011). Earlier this year, the Central Bank of Nigeria issued 11 mobile money-operating licences to service providers in the region. A number of services have already launched, with many more in the pipeline.
We also expect to see increased service innovation. According to the recent Visa Mobile Money Study, consumers understand mobile money within 18 months of service launch, find it easy to use and trust that it is secure.
The Visa Mobile Money Study found that consumers have complex, sophisticated financial service needs beyond the basic services currently offered – 56% of respondents want to pay utility bills and 52% want to save money for their family, for example. In many African markets where mobile financial services are now well established, the introduction of more sophisticated services is simply a matter of time. Consumers are already (also) demanding services such as insurance. And providers are looking to stand out in an increasingly crowded market by offering something new and different.
AZ – As one of the most rapidly growing economies in the world, sub-Saharan Africa continues to be the fastest-growing mobile market, according to the GSMA. The Praekelt Foundation states that mobile penetration has risen to 65%, with 50% of Internet connections in Africa being exclusively on mobile. This will not change in 2013 – if anything, the trend will accelerate.
We expect to see massive growth in the handset market as users continue to shift from cellphones and feature-phones to smartphones. Affordable and powerful mobile devices continue to bring the Internet to more and more people for the first time.
The growth and change this will spark in African economies is transformative. Mobile adoption has already contributed US$32 billion to the sub-Saharan African economy (GSMA). And there’s potential for it to offer even more economic upside as Africans increasingly use their mobile phones for more than texting and voice messages.
RIM is successful not only in South Africa and Nigeria, but also throughout Africa, Asia and Latin America – parts of the world that are the engines of growth for the global mobile industry.
The emerging markets of the world will remain a strategic priority for RIM in 2013, and we are listening to our customers to ensure our products meet their needs. FM Radio is one example of a feature we added to the new BlackBerry® CurveTM 9230 smartphone in response to feedback from BlackBerry users in Africa and the Middle East.
HO – It’s no secret that Africa has experienced a dramatic increase in mobile penetration with small businesses and economies having benefitted from this increased connectivity throughout the continent. Feature-phone availability played an influential role over the past few years and this trend continued throughout 2012. The intended release of super broadband 4G connectivity (also known as LTE), plummeting data costs and the increased accessibility of smartphones across Africa will all contribute to the continual African mobile explosion set for the telecommunications industry in 2013.
AS – Different VAS services have emerged in markets across Africa over the years. Voice revenues have declined and mobile VAS is beginning to contribute more to revenue for the operators. Over the next 2 to 3 years, the VAS market in Africa is expected to grow at a strong compounded annual growth rate of around 22% and will generate revenues of over US$11.5 billion.
Mobile money and prepaid recharge are two other very popular services across Africa. Based on the success stories in Kenya, and now Tanzania, operators across the continent appear to be making the most of it. Comviva would focus on its Mobiquity® mobile financial solution and PreTUPSTM prepaid recharge and target operators and banks.
With mobile data usage proliferating across Africa, Comviva identifies a need for mobile data management as operators and broadband providers experience three major challenges in the region: handling explosive data traffic growth cost effectively; monetising the mobile data opportunity; and ensuring a positive user experience.
SG – The African telecoms landscape will continue to generate excitement in 2013. Overall, bandwidth availability to underserved areas is trending up via new inland network buildouts intended to distribute the immense amounts of capacity now arriving along African shores through a number of undersea fibre options.
The challenge that will remain is providing an acceptable user-experience level into these areas by eliminating bottlenecks and single points of failure with a focus on reliability.
The solution to this challenge will be intelligent hybrid network solution designs that leverage fibre rollouts where they make operational and economic sense, with complementary, reliable microwave and satellite solutions where they don’t. Exponential user-demand and revenue- growth potential is present and a massive amount of content is now available at African shores – in 2013, telecoms operators will reach a tipping point as they determine a proper strategy of connecting the two.
2. Are there any major changes in store for the industry in 2013?
MVDB – Smartphones and reliable high-speed networks will drive an accelerated demand for mobile data.
CW – I expect to see the industry continuing its evolution, rather than experiencing major changes. Growth in mobile and Internet subscriptions and usage will continue, and innovative Africa-focused applications of these technologies will continue to emerge. While the African content will continue to grow, supported by local investment in IT programmes and Internet exchange points across the continent, as well as the initiative of global players such as Google and Microsoft, most content will continue to be drawn from international sources.
There will be no major new submarine deployments for at least the next few years, so I am expecting to see carriers boosting their international capacity while spreading their traffic across more cables to improve resilience – increasingly necessary as service quality becomes ever-more critical in the buying decision.
JM – We’re expecting to see increased competition among operators through more compelling voice and data tariffs, while we also expect to see improvement on the affordability of 3G smartphones and data-enabled devices. We also expect to see substantial growth in the variety and availability of locally developed applications and services. FGF – I think that the market will be limited to only 3 to 4 players across Africa from an OEM and operators perspective.
SD – LTE devices finally arrived in 2012, but in all but a very few markets there are only a handful of devices and we are still looking at “early adopters”. 2013 will have to be the year when they go mainstream in many markets, and the operators will have to move their focus away from deployment and launch, and into service assurance, optimisation and starting the networks down the long road towards repaying the massive investment.
NB – The number and variety of smartphones used in the region is soaring, with 40% year-over-year growth in sub-Saharan Africa through to the year 2017 estimated in a recent GSMA/Deloitte report. This, coupled with the increasing range of mobile data services and content available to African end-users, will have a major impact on the industry in 2013.
Although from the back-end we know that smartphones and advanced networks hold a host of new complexities that must be addressed, end-users will still demand the same seamless, always-on experience they have been conditioned to expect from their mobile devices.
Critical to ensuring exceptional end-user experiences is harnessing the massive quantities of data generated by users and turning that data into relevant real-time information that can be used to engage customers and proactively improve experiences. Doing so will position mobile service providers to thrive as the number of smartphones and services available continues to accelerate in the coming year and beyond.
The biggest challenge and opportunity for the African market in 2013 therefore will be the management of rocketing mobile data usage and customer data generation to ensure an optimal customer experience.
HVR – The major change for mobile financial services will be the increase in standardisation. At the moment, I can pay at nearly any shop in the world with a single card. In the same way I can call or text any other mobile phone in the world using my phone. The situation for mobile financial services is different. Very few existing services allow you to send money or conduct other financial services across networks, let alone across country borders. One in three respondents to the Visa Mobile Money study cited the lack of interoperability as a key barrier to adoption.
As mobile money services in Africa mature and consumer demand for more sophisticated services increases, interoperability between services and the wider financial economy will be critical to ongoing success. Domestic, cross-border and cross-network interoperability will gather pace in 2013 as providers seek to enhance the utility of mobile money services. And the need for standards goes beyond interoperability. Standards are also critical in building a wider ecosystem. To offer a service to a consumer, whether that is insurance, health or agriculture, you need a way for them to pay for that service. In Africa, the de facto payment method will be mobile. Mobile money providers and third parties need standards to ensure their services can scale.
Ultimately, by breaking down the walls between services and countries we can foster a rich ecosystem in Africa that connects consumers to rich services, each other and the global economy.
Take First Bank Nigeria’s mobile money service, FirstMonie, as an example. FirstMonie is available to all mobile phone subscribers in Nigeria, regardless of their mobile network. It allows a consumer on one mobile network to send and receive money from a consumer on a different mobile network. It is one of the first interoperable cross-network mobile financial services in the world. To meet the demand for advanced services, FirstMonie offers utility payments (airline tickets, electric, insurance), cash withdrawal at an ATM without a bank card, and payment for goods at merchant locations.
AZ – We’ll see Africa speed up its move from a voice-centric mobile market to one where data is equally important. Africa already has some of the highest levels of mobile Internet usage globally, but we will see telecommunications organisations, governments and handset manufacturers really step up their focus on driving mobile broadband in Africa this year. One area that will get a great deal of focus is spectrum allocation to drive the rollout of high-speed mobile broadband.
We’ll see LTE becoming a reality in some metropolitan areas in Africa, but, even more significantly, we’ll see 3G reach even more corners of the continent as network operators invest aggressively in capacity and infrastructure to grow their data revenues. In addition to base stations for the last mile, we can expect to see continued investment in national links around the continent.
In order for mobile to stake its claim as the central component to innovation, mobile computing platforms need to be more robust and scalable. These are key traits of BlackBerry 10 and it’s why we see it as a great opportunity not just for the next year, but for the next decade. Based on QNX, a long-established platform for embedded technologies across a whole range of vertical sectors such as the healthcare and automobile industries, BlackBerry 10 is future-proofed to take advantage of the next evolution in mobile. The launch of this platform took place on 30 January 2013 across the globe.
The rising mass-market penetration of “smarter” devices has had a profound impact on the use of mobile technology within the enterprise space as well, and this is a trend that will continue to accelerate during 2013. However, rather than focusing solely on managing BYOD, organisations will instead use the trend as the basis for developing a more holistic enterprise mobility strategy, which will meet the long- term needs of both the organisation and its employees.
RIM is proud of its success in Africa and will continue to work closely with our carrier partners to make all our latest products and services available to the local market and to ensure BlackBerry customers have the best possible BlackBerry experience.
HO – With smartphones on the rise, mobile web already surpassing desktop in Africa, application downloads increasing daily, increasing data connectivity and higher speeds at lower costs, 2013 is set to be a year for mobile! Watch this space!
AS – Content-based services like those that have succeeded in Asia are now becoming popular in Africa. SMS-based services like contests, CRBT, SMS and USSD portals, etc, are fairly successful and are showing promise in the African market. Such services bring alternative mechanisms for content distribution to the market. E-Governance and use of SMS for public information dissemination is another trend that seems to be catching on, adding to operators’ VAS revenues.
The key growth drivers would be the increasing demand for interactive communication among end-users, and, more importantly, the demand for mission-critical information on a real-time basis. Another important factor for the growth is the fact that a lot of useful critical transactions can be carried out through value-added services available today. MCommerce, social networking, video streaming, enterprise VAS and location-based services are some of the game-changers for the industry. A critical driver for this growth is the changing handset mix. The proportion of phones that can be called smart is changing more rapidly than at any time in the past. The additional capabilities in the hands of users will drive MVAS.
SG – We anticipate that regulators will increase pressure on operators to provide users with consistent network reliability, in line with their 3G/4G licence stipulations. The biggest challenge in doing so for mobile operators will be finding new ways to reach rural markets cost-effectively and in line with the initial promises made regarding these frequency rights. In line with this, efforts to ensure reliable connectivity will become an increasing priority. Satellite has an important role to play in this as it is still considered to be the best choice in most locations in terms of availability and reliability.
3. Will the prevalence of LTE networks affect your business in 2013? And why?
MVDB – Yes, demand for reliable networks capable of satisfying the demand for cost-effective mobile data will continue to drive increasing growth across the continent. Growth may be impeded, however, by the shortage of LTE-capable terminal devices at affordable prices, so in 2013 the primary driver will be 3G rather than LTE.
CW – LTE deployments will affect WIOCC’s business positively in 2013. They will drive uptake and usage of mobile broadband and associated applications, increasing demand for high-speed international connectivity from Africa’s east and west coasts as operators need to increase the capacity of their international Internet connections.
JM – Globally, LTE is seeing considerable interest in regions where operators are looking to supplement their 3G networks with the additional capacity that 4G provides. As these operators deploy their 4G LTE networks, they obviously still need to provide backward compatibility to maintain the continuity of their services. They need multimode devices that support 2G, 3G and 4G in the chipset and make it seamless for the consumer. That’s what Qualcomm has focused on, so, in terms of our business and chipsets, we’re sitting in a very good position to help enable these services.
In the case of Africa, mobile data services are still relatively new and still in its early growth stages. 4G LTE services are most common in areas where 3G services are very mature. I therefore expect we’ll continue to see 3G mobile broadband services across the continent for quite some time.
FGF – It will only support our efforts, as we are one of the few OEMs to offer all our products LTE-ready.
SD – Arieso’s solution supports LTE as well as UMTS and GSM, so we expect to see even more operators deploying the LTE option. One of our unique abilities is to give the operator insight into how the subscriber experiences the interaction between the technology layers, and we expect this will be critical to operators. We know that the most valuable customers are likely to adopt LTE devices first, and we know that, especially in early deployments, the experience they get will depend as much on the 3G layer and its interaction with LTE as it will on the LTE layer itself. Operators will obviously want to give their best customers the best experience. YDigital uses pull strategies of mobile advertising instead of pushing intrusive messages out to consumers on an extremely personal device. Through the use of mobile web and application advertising, users are enticed to click on specific ad placements. There is no collection of user data unless consent is given by the user. We work closely with our clients to ensure that campaigns are industry and country compliant.
NB – Syniverse has been leading the industry through the transition to LTE, and we will continue to support operators rolling out LTE networks in 2013. In Africa, this will hold particular importance as the race to deliver high-speed service to subscribers intensifies in 2013. In particular, we have created an LTE roaming testing environment that allows operators to conduct end-to-end LTE roaming trials via Syniverse’s IPX network. Our trials enable testing of authentication and signalling on LTE networks as well as critical LTE roaming functions, such as real-time intelligence and wholesale clearing and settlement. We now have trials complete or under way with seven operators around the globe, bringing them closer to launching LTE roaming to subscribers.
In addition to LTE, Africa’s operators are increasingly turning to Wi-Fi to give subscribers better access to mobile services. Syniverse is supporting these efforts with our Wi-Fi product portfolio, which includes clearing and settlement, as well as solutions that help operators leverage Wi-Fi to deliver better quality voice and messaging service in areas where traditional network coverage is low.
AZ – 2013 looks set to be another fiercely competitive year in the mobile industry, with the pace of technological development and change of recent years showing no sign of slowing down. Naturally for us at RIM, it is one of – if not the most – significant years in our history, with the launch of our brand new BlackBerry® 10 platform on 30 January. BlackBerry 10 represents our biggest innovation since the company was founded and we believe that it will have as profound an effect on the next 10 years of mobile as our technology has had on the last 10 years.
HO – LTE will have a significant impact on the growth of our business with users experiencing more convenient, super-fast connectivity. The expected decrease in data costs will result in a surge in mobile Internet traffic. The demand for localised content will increase and so will the need for advertisers looking for innovative ways to reach mass markets. We are extremely excited about the effects that LTE networks will have on our business and the ecosystem as a whole.
AS – We believe that the further growth of the Mobile VAS (MVAS) industry would primarily come from deeper penetration of mobile services through the rollout of LTE services. LTE networks are capable of providing data speeds that are 10 times faster than the third- generation (3G) networks to deliver rich content to smart mobile devices.
SG – There has been significant buzz around LTE, and because of this, expectations are very high. However, there is a conflict between the promises of this new technology and the cost-effective reality of LTE, particularly when it comes to accessing rural markets. Initial LTE rollouts will be in urban areas in 2013 and we don’t foresee a huge amount of LTE content going over satellite in 2013. That said, we do embrace this buzz and the increased bandwidth that this technology offers as a further enabler of economic growth for the region, and are closely tying mobile operators’ plans on leveraging this technology into our plans.
4. Will the effectiveness/non-effectiveness of regulators in Africa affect your business in 2013? And why?
MVDB – The primary challenge in building out high-speed mobile networks is the availability of the necessary spectrum, particularly for LTE, and this is an area where many national regulators have dragged their feet. This needs to be addressed with urgency. Another area which could benefit from positive regulatory intervention is the need to eliminate the numerous national barriers to landing submarine cable capacity in many countries, especially on the west coast of Africa. We have gone from famine to feast in terms of the amount of submarine fibre which is now (and about to be) available up the west coast, but cost-effective delivery of this capacity is still hampered in a number of countries by the high costs associated with landing and backhauling the capacity within a number of coastal countries.
CW – Regulation certainly has a significant part to play in the ongoing development of Africa’s communications markets in Africa. The award of new mobile or unified licences creates potential new WIOCC (West Indian Ocean Cable Company) customers or extends the communications requirements of existing customers. Regulators can have a significant influence on the success (or otherwise) of competition and, therefore, on the climate for investment (including investment in networks). When applied effectively, regulation creates an environment that encourages investment. However, too much competition can damage markets and result in investment being stifled.
JM – In many of the markets across Africa, regulators have been both progressive and forward-thinking in their policies and approaches to mobile. They clearly see it as an economic enabler, which translates to economic growth and improved quality of life for Africa’s citizens. To this end, it’s important to have sensible regulatory and spectrum policies that enable this growth.
Effective spectrum management and reduction of administrative barriers to network expansion will be key enablers of mobile broadband in Africa. The Africa Telecommunications Union (ATU) has been a leader in facilitating regional discussions aimed at harmonising policies and regulations. The ATU’s work in creating a comprehensive plan to utilise spectrum resources will benefit Africa and everyone helping to grow Africa’s mobile industry.
FGF – As an OEM, we are affected both positively and negatively by what regulators decide on. However, I think great strides have been made to improve conditions for all across Africa. I think it will continue to support us in achieving our objectives.
SD – 2012 was interesting for regulators taking serious action against network operators who delivered bad service to their customers and holding them to account until they fixed it. African regulators are continuing to put pressure (and fines) on operators to improve network quality. We support this as the correct direction for the industry to evolve and have been discussing the need for a focus on customer experience in recent news announcements.
NB – Syniverse expects little impact to its business due to regulators, as our role is to provide solutions to mobile service providers that help them overcome any mobile challenge. If regulatory requirements change, we will use our expertise to support the needs of Africa’s mobile community.
AZ – BlackBerry 10 will introduce the shift from mobile communication to true mobile computing. We have redesigned, re-engineered and re-invented BlackBerry to create a new, unique mobile experience. This new platform has been designed from the ground up, based on careful study of how consumers interact with their devices, the work and personal activities that fill their days, and their drive to be connected and get things done. BlackBerry 10 features such as BlackBerry® Flow and BlackBerry® Hub offer a game-changing user experience that enables easier and more powerful collaboration. BlackBerry Flow is a new feature that allows seamless navigation across open applications and the BlackBerry Hub, where one can see work and personal emails, messages, social media activity and more.
The enhanced BlackBerry® BalanceTM technology is designed for the new world of Bring Your Own Device (BYOD) computing, where users want a seamless experience whether they are using their device for work or personal purposes.
HO – YDigital uses pull strategies of mobile advertising instead of pushing intrusive messages out to consumers on an extremely personal device. Through the use of Mobile web and Application advertising, users are enticed to click on specific ad placements. There is no collection of user data unless consent is given by the user. We work closely with our clients to ensure that campaigns are industry- and country-compliant.
AS – These are a mix of regulatory issues and legal environment, underdeveloped telecom infrastructure and high taxation which cause challenges in deploying services, like in any other emerging markets. The effectiveness of regulators towards improving these issues will not only benefit the VAS players, but the entire ecosystem.
SG – We see regulators placing increased pressure on mobile operators to meet their licence obligations, and, in particular, obligations relating to rural areas. We are also interested to see how regulators and operators will plan traffic flows across enlarged coverage areas subsequent to the network rollouts, and, in particular, the impact of this on the necessity to keep local content within-country. In anticipation, our solutions will continue to evolve to support these obligations through new designs, including Intelsat EpicNG, which we announced in 2012.
5. What single topic will be the most relevant for you in 2013?
MVDB – Delivering cost-effective terrestrial capacity to landlocked countries in Africa.
CW – Availability of low-cost, smart mobile handsets – one of the key enablers for broadband growth in Africa – will have a significant impact on demand for international capacity during 2013. Much of the discussion at last year’s Mobile World Congress was around low- cost smartphones – with price points of US$50-70 predicted to be possible within two years. However, the cost of smartphones is coming down very fast, and we are already seeing these price levels in some African markets.
JM – Smartphone affordability is a significant priority for Qualcomm. Bringing mobile Internet services to the masses requires devices that are financially within the reach of most consumers. This is why our company created the Qualcomm Reference Design (QRD) programme. QRD provides mobile device OEMs with all the innovation and unsurpassed technical excellence they expect from Qualcomm – but in a completely integrated and tested package. This enables OEMs to develop new devices and bring them to market much more rapidly and cost-efficiently than if they started from scratch, and this efficiency helps bring down the cost to consumers. Through QRD and other programmes, we’ve rolled up our sleeves and are working overtime to find new ways to help our partners’ efforts to extend the mobile Internet to every corner of the continent. It’s an ambitious goal but want to help make it a reality.
FGF – Data prices drop, consumers will want to go out and buy smart devices to access information. We need to be ready as a company to support this. SD – Our focus will remain the same – helping network operators around the world become customer-centric, and deliver great experiences to their customers in a cost-effective manner.
NB – In 2013, the single most important topic for Syniverse – and for our customers across Africa – will be real-time experience management.
Mobile technology has accelerated customer analytics by light years, and the customer experience can now be measured anywhere, anytime if solutions that are able to turn massive quantities of subscriber data into relevant customer information are in place.
As a result, real-time intelligence is revolutionising the way mobile service providers and companies connect with consumers, and we see this as an area of vital importance in Africa in order to meet increasingly high consumer demands. The winners in this revolution will be those providers and brands that are able to rapidly and proactively resolve issues, as well as create personalised offerings to cater to each customer as a “market of one”.
Syniverse offers a suite of Real-Time Intelligence solutions that help operators globally address these needs. Today, more than 100 mobile service providers use these tools for improved customer insight and service. We expect the interest and adoption in these services to grow exponentially over the coming year as safeguarding the customer experience becomes the major priority for operators in Africa.
HVR – In 10 years, 100 million people have been newly “banked” using mobile technology. However, mobile financial services are far from reaching their potential. Only a handful of deployments have enjoyed mass adoption. According to a recent industry survey, the number of subscribers that remain active can be as high as 99.7% and as low as 0.2%. The mobile money market in Africa is polarised between the phenomenal and the mediocre.
Activation has remained polarised for a number of reasons – but two are critical. Standards were not addressed at the outset, limiting the utility of services. If services are not interoperable and do not evolve to meet the needs of consumers, then they simply will not be adopted. Secondly, the Visa study suggests that the adoption of a mobile financial service is determined by how deeply a mobile money provider understands its customers and tailors the service to the needs of consumers and mobile money agents – from service menus to marketing and education. For example, the study found that the specific vernacular used is critical. The words “safe keeping” rather than “saving” money resonates with consumers and will drive them to adopt.
Driving consumer adoption and ongoing use is the single biggest challenge facing the mobile financial services industry in Africa and this will be our core area of focus in 2013.
AZ – Africa is one of the world’s fastest-growing mobile markets and a strategically important region for our business. We are proud of the success of BlackBerry in Africa and our continued leadership in the biggest smartphone markets on the continent. According to GfK Retail and Technology (October 2012), BlackBerry still holds a leading smartphone position in South Africa and Nigeria. While we continue to service our loyal customers, we look forward to introducing BlackBerry 10 to Africa.
HO – Integration of mobile into the overall marketing mix.
AS – There will be a steep uptake of use of mobile banking. 2013 could be the year that Africa really breaks through in terms of mobile money. The region provides a unique proposition where we have both numbers and potential of volume transactions and mobile money could really take off in a big way.
SG – Hybrid network equilibrium is a hot topic for us in 2013: How do you best match fibre, microwave and satellite to address the needs of different areas? We are in favour of hybrid solutions which encompass all three, and mobile operators will need to allocate resources to each to provide cost-effective and reliable solutions for their customers. Fibre is reaching places where satellite used to be the only option. Satellite also continues to support inland penetration, which is extremely exciting as the continent seeks to achieve fast improvements in connectivity through the development of game-changing solutions. AT
BIG BAD MOBILE INTEL
The big daddy of the computing revolution, Intel, is focusing all its considerable resources on Africa. Intel is currently the global leader in computer processors that power the vast majority of servers, desktops and laptops across the globe and their innovative and cost-effective products have enabled a massive growth in computing globally. Coming off a low base, Africa is now catching up fast.
The major growth in Africa has been mobile. This is one area where Intel fell behind other companies such as Qualcomm and NVidia, along with many Asian manufacturers of low power processors, based on Arm technology. These low-cost, low-power chips fuelled the growth of low- cost smart devices growing rapidly in Africa.
That all changed at CES 2013 in Las Vegas. Intel opened the conference with an Android smartphone specifically designed for emerging markets.
Mike Bell, Intel’s VP of the Mobile Communications Group, highlighted the new Atom Z2420 processor, which has high-end features at mid-level pricing aimed squarely at the more than 500 million potential customers in emerging markets globally. These new mobile Atom systems on a chip or SoC match, and in some areas outdo, the competition and, coupled with Intel’s global partnerships and distribution, may well herald Intel’s emergence as a force to be reckoned with in the mobile space.
As part of their long anticipated mobile strategy, the new smartphone platforms with Intel inside, coupled with their Africa focus, may well make Intel a key player in the emerging Africa mobile smartphone and smart device (read “tablet”) arenas.
When asked which the second biggest smartphone brand in Africa is, many would venture Samsung or LG. The crazy fact is that currently the second biggest brand is fake Nokias. Nokia have hit on hard times recently with their failed transition from the Symbian platform to the Windows platform. Their latest offerings from Windows appear to be doing well but Windows phones simply is too high-end for much of Africa, where their Asha range of smart devices has actually been doing really well.
Nokia continues to be number one in South Africa and their top selling Xpress music 5130 phone is still one of the top sellers across the continent. With their laser focus on the Asha range and the availability of its Windows Phone-based Lumia range in more and more countries across Africa, Nokia appear to understand exactly what users in Africa actually need. Often superphone battery life of under 10 hours and data- intensive applications make them unattractive in a continent where cost certainty and lack of readily-available power makes the less-expensive and very capable Asha range preferable.
The lines between traditional feature phones and smart devices are getting increasingly blurred and Nokia look poised to continue their hold on their key African markets. The main reason for this is that Nokia clearly understand what the customer needs and have products that address these needs far more effectively than those that work for much of the developed world.
Samsung have been surging ahead for most of 2012 and look set to dominate the smartphone space for 2013. Samsung have become the must-have smartphone with their Galaxy S3 and Galaxy Note 2 and it appears the momentum is only building.
The Galaxy range has now sold over 100 million devices globally, with the Galaxy S3 selling in excess of 40 million. The imminent launch of the Galaxy S3 style Ativ Windows Phone 8 device in South Africa will further cement Samsung’s dominance of the smartphone space.
As smartphone penetration moves toward 40% of the market in South Africa in 2013, and firmly above 10% for Africa as a whole, the Samsung Galaxy range – which includes real value, lower cost devices such as the Galaxy Ace and Pocket – are well-positioned to take an even greater share of the market across the continent.
Samsung’s greatest competition will come from Chinese manufacturers such as Huawei and ZTE. The advantage Samsung has is that it’s distribution of its other products in Africa, as well as its consistent brand promotion, has given Samsung an enviable position as far as brand recognition is concerned.
QUALCOMM, WHAT’S INSIDE COUNTS
Deep innovation is what counts for this little-known company.
Qualcomm currently makes most of the chips that power the vast majority of smartphones on the market. The chances are that if you have a 3G-enabled phone, or more recently, an LT-enabled device you are using Qualcomm technology.
At the recent CES 2013 conference in Las Vegas, Qualcomm CEO Dr Paul Jacobs coined the phrase “born mobile”, and we are all in fact living in the “born mobile” generation. Mobile connectivity, driven by pioneers and innovators such as Qualcomm, is most definitely redefining how we do business, and how we communicate across the planet. The effect of all this innovation in mobile is having a profound effect on Africa in paricular and the world as a whole.
Africa will, in fact, be the first mainly mobile continent; with 4G LTE rolling out across many countries in Africa, a connectivity explosion is around the corner. From the low end to the ultra-high end with their newly-announced Snapdragon 800 chipset, Qualcomm are a mobile force to be reckoned with.
AIRTEL AND CELL C – A NEW PARTNERSHIP?
Cell C South Africa is the number three mobile network in South Africa with around 15% marketshare. Their new CEO, Alan Knott Craig, has set his sights on doubling Cell C’s marketshare in the next few years. The result will be that Cell C will have equal marketshare to the two main players, Vodacom and MTN, with around 30% each.
These are ambitious goals and will need significant investment in not only telecommunications infrastructure, but retail and distribution resources, along with administrative support that is an order of magnitude greater than they currently have. One solution is to find a partner who understands scale, and can bring the investment and expertise needed to assist in doubling the marketshare of Cell C.
The rumour mill has been churning out possible partners for a while, but one stands out – Bharti Airtel. Airtel is an Indian-based mobile operator with over 246 million subscribers in Asia and Africa. They abortively tried to do a deal with MTN recently, and are on the growth trail in Africa as a whole. Airtel is definitely a company to watch for 2013 as their Africa strategy plays out.
REDKNEE MOVE INTO AFRICA
Business Support Services (BSS) is a huge area of growth for African mobile service providers. As the market matures and data services grow along with the rapid growth in subscriber’s sophistication, African networks will be looking for ways to increase revenues, and bring additional services to its subscribers. Nokia Siemens Networks, or NSN, have long been active in Africa with relationships with numerous significant mobile operators.
The sale of the BSS division by NSN to Redknee, a little-known Canadian BSS provider of almost equal size to the NSN division, represents a significant change in the BSS landscape traditionally dominated by integrated services and hardware providers such as Ericsson and the market leader in this space, Amdocs.
Expect to see fierce competition in this space as services and products offered by the mobile operators in Africa surge in both size and scale in 2013.
VMK SAYS LOCAL KNOWLEDGE IS BEST
Africa will be home to some cutting-edge manufacturing of mobile phones and tablets by VMK, the company led by entrepeneur Verone Mankou from the Republic of Congo.
Although the VMK devices are being assembled in China, the design is uniquely African. Initially, two products only are being offered – the Way-C Tablet, billed as Africa’s first tablet computer, and the “Elikia” smartphone, which translates to “hope” in the local Lingala language.
The Elikia smartphone is on sale in the Congo for around US$171 and the Way-C tablet stands at a competitive US$300. Mankou says the fact that all development of his products is local, and African, this will set them apart from any competition. “Only Africans know what Africa needs,” he says. “Apple is huge in the U.S., Samsung is huge in Asia, and we want VMK to be huge in Africa.”
The key to the success of the two products will be local knowledge of the Africa markets, and super-competitive pricing, but already the vision of VMK and the price-versus-specs aspect of the launch products are sound.
BLUWAN FIBRE THROUGH THE AIR
Infrastructure is the missing ingredient in the growth of broadband in Africa, and in Somaliland an innovative and effective system of “fibre through the air”, as Bluwan call it, is being deployed. The innovative system comprises small outdoor antennas connected to customer devices that receive wireless broadband transmissions from a central transmission hub.
Each hub is able to provide up to 8 gigabits per second of capacity in a 360o five-kilometre radius, delivering average constant speeds of 2 megabits per second (minimum bandwidth for advanced broadband applications such as HDTV), peaking to speeds of 100 Mbps to thousands of customers. Michael Cothill, Chief Executive Officer at Somcable, commented: “We have set a target to provide one million subscribers with access to high-speed broadband by 2015, to help move Somaliland into the knowledge-based economy.”
Innovative combinations of wireless broadband backhaul, in conjunction with standard terrestrial equipment such as Wi-Fi and fibre to the premises, cleverly bypass the time and expense of massive infrastructure deployment. Expect to see this innovation in use in more parts of Africa in 2013.
SPICE AFRICA - TAKING DIGITAL CONTENT TO THE CONTINENT
Content is king, it is said, and with the explosion of connectivity and the massive growth in smart devices across Africa anticipated for 2013, value-added services or VAS should grow rapidly in 2013. Having cut its teeth in the hyper-competitive Indian market, Spice are now spreading fast through Africa.
Music and other value-added services are top of mind for most users once they have a device capable of accessing these services and Spice appear to have a good headstart and understanding of the Africa market.
The spice platform allows music and artist discovery, along with creating a platform for local content.
The Spice platform offers far more than simply music and adds numerous other services such as SMS, apps, education and many others delivered by mobile services. Spice Africa CEO Arun Nagar believes that Spice, together with its mobile partners, will help change how people buy and listen to music across the continent.
He further believes that music will become a cornerstone of the business models for mobile operators across the continent. Spice has also become a music aggregator itself, signing up numerous local artists across the continent.
There is no question that VAS will proliferate and grow along with mobile users’ needs and preferences and Spice appear to be well- positioned to take full advantage of this trend in 2013.
LIQUID TELECOM - INFRASTRUCTURE IS KEY TO PROGRESS
The Liquid Telecommunications group is a key player in the infrastructure and wholesale carrier services environment on the African continent.
Massive growth in undersea cables coupled with the concomitant leap in usage of Internet and telecommunications services have placed massive strain on the infrastructure of most Africa nations.
Liquid Telecom has turned this challenge into opportunity, and are playing an increasingly important role in connecting Africa to the rest of the world. The various mobile and fixed-line operators are increasingly turning to partnerships with companies such as Liquid Telecom to assist in the rollout of fibre infrastructure coupled with satellite backhaul.
Liquid have recently taken over Altech’s east Africa infrastructure operations in a complex deal, which brings Altech onboard as a shareholder and partner. The acquisition makes Liquid one of the biggest terrestrial fibre operators in Africa, and adds scale to an already dynamic company.
Liquid’s deep investment in fibre infrastructure offerings coupled with its expertise in payment solutions, as well as IP transit, have combined to place the company on a fast-growth track. All these key services will be critical to the successful deployment of much of the mobile infrastructure in Africa. 2013 will be a significant year for Liquid Telecom as mobility continues its charge in Africa.