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Africa: Balancing Act Internet News

AfricaFocus Bulletin
Dec 7, 2006 (061207)
(Reposted from sources cited below)

Editor's Note

"In less than two years, the bandwidth of traffic on Internet services provided by Senegal's telecom Sonatel has doubled. By today, Internet services provided by Sonatel are the most extensive in sub-Saharan Africa, second only to those in South Africa, a country of much bigger resources." - Balancing Act News Update

As shown by this news report and others appearing in the weekly Balancing Act electronic news update, the IT and technology scene in Africa is changing rapidly. But the proliferation of projects can also result in obstacles and confusion. This AfricaFocus Bulletin includes selected reports taken from recent Balancing Act updates, including reports on new fibre connection projects in East Africa, and on new developments in Senegal, Mozambique, and Nigeria.

Balancing Act updates are available at Another AfricaFocus Bulletin sent out today gives updates and background on new efforts to expand international bandwidth for Africa.

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Kenya Begins the Countdown to Cheap International Fibre

Balancing Act's News Update 332 (19th November 2006)

It's like waiting for a matatu [in Kenya: van/bus]. You wait for ages and none come along. But just when you're about to give up hope, three come along at the same time, all trying to come to a screaming halt in front of you. Kenya now has three (or more) potential international fibre projects that could be complete within 12 months. Each one is loudly proclaiming that it will deliver cheap international bandwidth. Russell Southwood took the temperature in the market last week about what the impact of this bandwidth will be upon the market.

The Kenya Government has signed an MOU to build a fibre link to Fujairah in the UAE currently costed at Ksh5.7 billion. The construction and supply contract will be awarded early next year and the project, dubbed The East African Marine System (Teams), will be ready by November, according to a joint statement issued by both parties from Dubai. Many in the sector believe that it will be more like 19 months or more before completion.

The Kenya Government will have a 40 per cent holding in the project, Etisalat 20% and the remaining 40% will go to investors in the East African region. The Government has said it will organise an IPO on the Kenyan Stock Exchange. Several Kenyan companies have expressed interest and one said that the Government had told them it would "guarantee their loan". The details of the finance package have not yet been settled but it is unclear where the Kenyan Government will raise its 40% from. Will the World Bank simply shift a portion of its EASSy funding to the new project as many think likely?

The Government's commitment to a 12 month schedule is a bold move but one that must lay them open to a certain amount of scepticism. The tender for expressions of interest was only issued 2 weeks ago and Government timetabling is notoriously slow compared to the private sector. Apparently the Private Secretary has been telling interested parties that the Government wants prices comparable to those to be found in India in 12 months time. This benchmark has been set in order that Kenya will be able to compete in the international outsourcing market.

Apparently a number of interested parties said that they would put up all the money to build it if they could have a monopoly and he sent them away disappointed. But more worryingly one interested party told us that it could only get involved if it also allowed Telkom Kenya to be a shareholder.

The next international fibre project is KDN's and it has now signed its contract with Flag Telecom. Its link from Mombasa will terminate in an undersea junction in international waters off of the Yemen. It says the link will be fully operational in the first quarter of 2008, just 15 months away. The company believes that it will come to market with capacity at $500 per mbps pm but that the price of bandwidth will go up to those wanting to invest as time passes. In other words, for those who commit early prices will be lowest and for those who come in late, prices will go higher. It also stresses that its landing station at Mombasa will allow other carriers to co-locate there charging only electricity and services at cost.

So this leaves the third project EASSy looking as if it will be the third runner. NEPAD appears to have made little more progress on persuading more African Governments to sign its political protocol. And whilst the members of the EASSy consortium (that still includes KDN and Telkom Kenya) are still moving things forward, there remains a disconnect between the political and commercial ends of the project. If both of the above projects go ahead, there is clearly much less need to build the Mombasa-Djibouti section of the route and it has to be said that both of the above projects have better international connection points.

As if three were not enough, Ethiopia's ETC has now had its international fibre connection working effectively for two months via Port Sudan and Saudi Arabia. But because it is landlocked and it had endless fruitless arguments with Djibouti Telecom over control of a possible fibre link, it wants to find a second international fibre connection. Therefore it is in serious conversations with both of Kenya's fibre network operators about connecting to the Mombasa links when they are ready. If this goes ahead, both it and Kenya will then have two international fibre links.

Because the process of getting the international fibre to Kenya has been both confusing and "on-off", everyone in the market (including customers) have understandably not really grasped the impact of its arrival on their businesses. Until now ISPs and satellite resellers have largely been in the businesses of living on the margin they make between buying and selling bandwidth.

These margins have been kept high as they have concentrated on selling to comparatively few customers. Ironically it has been a high-price, low volume business where their primary commodity - bandwidth - has always been in short supply, not least because some of them increased their margin by contending it as much as possible. This has meant that bandwidth quality is often variable at best for those not paying "top dollar" for a premium service.

If you argue that international fibre prices should be low price, high volume, then the national business model changes: what's sauce for the goose is sauce for the gander. Bandwidth becomes cheap and plentiful at a sub $1000 threshold. The margins that can then be charged make it difficult for those who are not operating at volume to stay in business.

However it does now open up opportunities for new services, content and applications that can be sold to customers who should now be paying European prices for real broadband connections (1-2 meg upwards) rather than the paltry 64 kbps they are currently receiving. There are at least 500,000 households in Kenya that are at an income level that make them potential targets for broadband. It would take only half of those households to sign up for there to be the beginnings of a very different market.

The real sign that the market has not "got it" is that some key ISPs are not passing on the information about these soon-to-be cheap prices but are seeking to protect their high margins by telling customers higher prices. A heads-up, guys. The sector is a village and news will get round quickly and we'll encourage the circulation of this price information. The market's about to change, get ready to change with it.

At the national level, there is now a third source of fibre capacity. Jamii Telecommunications has signed an agreement with the Kenya Light and Power Company (KPLC) to sell an STM1's worth of its fibre capacity in Nairobi and Mombasa, with KPLC saying that it will triple its capacity shortly. Two other companies - CTN and Cable Vision - have been granted a licence to sell KPLC's capacity and it is telling (in terms of the argument above) that both are in the video download and pay-TV business. Not so far afield, Tanzanian power utility TANESCO is currently building out fibre capacity and has invited bids to sell this capacity. Again KDN is poised to make a fibre connection to Tanzania.

However a recent ping on the Kampala-Nairobi route shows that neither KDN nor Telkom Kenya has got its fibre route operational. KDN is promising it will be operational by the end of first quarter 2007 and that prices will be 20% cheaper.

Elsewhere in the market, the new VoIP operators are finding it difficult to get interconnection agreements and to get proper service from interconnect service providers. Telkom Kenya is charging absurdly high prices but has at least reached interconnect agreements. Nevertheless the new fixed wireless operators - Flashcom and Popote - are having difficulties: customers are unable to receive or make calls to certain countries. Apparently anyone who calls a customer number of these fixed wireless operators from Germany gets a number unobtainable.

Access Kenya's Yello VoIP service has been aimed at corporates and has attracted 250 customers who generate 120,000 minutes a month. But it has had difficulty getting interconnection agreements with the mobile operators. It made a complaint to regulator CCK in April and became so frustrated that it said it would run an advertisement publicising the position. Safaricom came back to the table but Celtel refuses to enter discussions, saying that it will do so in its own time.

Kenyan ISPs are under heavy pressure from all the new operators. Flashcom and Popote are taking more money from data than voice at the moment as customers are primarily signing up for cheaper Internet access. Also the introduction of EDGE services by Safaricom is eating into their high-end customers: one ISP's CEO admitted privately that he was losing hundreds of customers a month to these new competitors. The challenge for everyone in the market will be whether they can take the soon-to-arrive cheaper international bandwidth and use it to transform the market.

Internet Booms in Senegal as International Bandwidth Breaks 1 Gig Barrier

Balancing Act's News Update 326 (8th October 2006)

In less than two years, the bandwidth of traffic on Internet services provided by Senegal's telecom Sonatel has doubled. By today, Internet services provided by Sonatel are the most extensive in sub-Saharan Africa, second only to those in South Africa, a country of much bigger resources.

This is reported in a press release by the Senegalese telecom company, which explains that "bandwidth of traffic on the submarine cables of Sonatel by 7 September 2006 has passed the mark of 1.24 gigabyte a second."

This bandwidth of traffic is both a key measure of quantity, but also of the quality of Internet services provided to the public, "because it determines the speed of downloading pages, notably from servers based in Europe or the United States, and at bottom line, as this number is increased, the more comfortable your use of the Internet gets," the Sonatel statement adds.

The company further explains that the current extensions were to offer users in Senegal services that are of a superior quality, that come at a higher speed and that will provide for more comfort on the Internet; including improved flow in the downloading of pages and quicker downloads of information, navigation, reception of e-mails, teleconferences and multi-media services.

Bandwidth of Internet traffic to and from Senegal, as operated by Sonatel, has been increasing at a booming speed ever since 2002. It went from 42 to 53 megabytes a second in June 2002. By November 2004, it had already increased tenfold, reaching the level of 512 megabytes a second. By now, it has again doubled, reaching the benchmark of 1.24 gigabytes a second.

Internet use in Senegal has also been booming for the last years, especially in Dakar, but also beyond the capital, where an impressing telecom infrastructure has been created. As prices for broadband installation and services rapidly are going down, a bigger segment of the population uses the Internet at work and at home. Standard broadband subscriptions cost around euro 80 for installation and euro 40 a month, while even cheaper deals can be found.

The real boom in Internet - reaching a large part of population - is however attributed to Senegal's large and ever-growing number of telecentres or cybercaf‚s, which combine telephone and fax services with Internet renting at a low price. Renting a computer connected to the web normally does not costs more than franc CFA 300 (euro 0.45) an hour. Uses vary from e-mail communication to news reading, chatting, games and multi-media usage, and costumers include almost all social layers. (SOURCE: afrol News)

Internet Access on the Increase in Mozambique

Balancing Act's News Update 329 (29th October 2006)

The number of Internet Service Providers (ISPs) in Mozambique has grown dramatically, implying an enormous increase in the past few years in the number of companies, institutions and individuals with internet access.

The general manager of the regulatory body, the Mozambican National Communications Institute (INCM), Luis Rego, told AIM that at the end of the 1990s, there was just one ISP in the country - the Eduardo Mondlane University. But today there are more than 20, in what has become an expanding and fiercely competitive market.

However, internet services are heavily concentrated in Maputo, with some of the ISPs reluctant to expand to smaller cities, on the grounds that the demand there is not sufficient, or the electricity supply is not reliable. The latter argument, however, no longer holds for any of the provincial capitals, which are all linked to the national electricity grid based on the Cahora Bassa dam.

Rego was speaking during a break in a Technical
Telecommunications Meeting of the Community of Portuguese Speaking Countries (CPLP), held in Maputo to exchange experiences on regulatory matters, universal internet access, broad band, and satellite networks, among other questions.

It is difficult to establish how many Mozambicans use the internet. Clearly only a small minority have been able to purchase their own computers and thus have internet access at home. But many more can use the internet at their workplaces, or in the increasing number of Internet cafes dotted around the country.

The Eduardo Mondlane University estimates that 600,000 people (out of a total population of around 19 million) currently have Internet access.

The INCM hopes that more ISPs will provide services in the smaller towns. The leader in this field is the company Teledata, which now operates in all provincial capitals, and several districts. (SOURCE: Agencia de Informacao de Mocambique)

Ghana Retains Seat at World Telecom Conference in Turkey

Balancing Act's News Update 333 (26th November 2006)

The climax of the Plenipotentiary Conference of the International Telecommunication Union (ITU) on-going in Turkey was reached on 15th November 2006 with the election of 46 Member States to sit on the ITU Council. The Council represents the membership of the Union in the interval between Plenipotentiary Conferences and its role is to consider, within the period, broad telecommunication policy issues to ensure that the Union's activities, policies and strategies fully respond to today's dynamic, rapidly changing telecommunication environment.

It also prepares a report on ITU policy and strategic planning. In addition, the Council is responsible for ensuring the smooth day-to-day running of the Union, coordinating work programmes, approving budgets and controlling finances and expenditure.

Each of the five administrative regions is entitled to a number of seats, that Member States compete for through balloting, to make it to Council. The competition this time round was fiercest in Region D (Africa) where 20 countries contested for the 13 allotted seats.

In a tense voting session to decide the Council Members, Ghana retained its seat on the Council with an improved performance from the last Plenipotentiary Conference. Ghana placed ninth this time (107 votes) as against the 13th position (83 votes) it occupied in 2002 in Marrakesh, Morocco.

The casualties from the Africa Region were Uganda, Burundi, Sudan, Gabon, Cote d'Ivoire, Rwanda and Zambia, as they failed to make it to the Council. Ghana's Minister for Communications, Professor Mike Oquaye was earlier in the year elected Chairman/Coordinator of the Commonwealth ITU membership.

Ghana, as Coordinator for Commonwealth positions in the Plenipotentiary Conference, was in the forefront of the negotiations that saw the election of Mr. Hamadoun Toure of Mali to the top position of Secretary General of the ITU.

Prof. Mike Oquaye was mandated by the Africa Group and the Commonwealth ITU Group to seek the support of the other Regions of the ITU in the crucial third round voting that eventually secured the seat for Africa. The task involved diplomatic skills and saw the Ghanaian Minister winning great admiration in the process.

Ghana had to withdraw the candidature of Mr. John R. K. Tandoh in the contest for the Position of Secretary General of the ITU, because the topmost position had been won by an African and for that matter the ITU would not vote for a second official from Africa.

For the same reason, Patrick Masambu of Uganda who was the front-runner for the Position of Director of the Development Bureau succumbed to Al Basheer of Saudi Arabia for a position that was well deserved for Africa.

The conference will end on 28th November 2006 with the ratification of various Acts to guide the Telecommunications sector.

(SOURCE: Ghanaian Chronicle)

Nigeria Will Be Africa's Largest Phone Market

Balancing Act's News Update 333 (26th November 2006)

Nigeria is set to take over from South Africa as the largest mobile phone market in Africa by the end of 2007.

This information was disclosed by Informa Telecoms & Media's World Cellular Information Service (WCIS),a searchable on-line database providing a constantly updated and accurate source of research data on the wireless industry worldwide. .According to the information service, Mobile subscriptions in Nigeria will exceed 30 million at the end of 2006 and 35 million in South Africa. Informa also forecasts 44 million users in Nigeria and 40 million in South Africa at the end of 2007. Nigeria according to the statistics released will then account for 19% of Africa's total mobile users up from 14% at the end of 2006. Nigeria is also expected to add 13 million subscriptions over the year 2006, an increase of 44% compared to the net additions recorded over 2005.

According to Devine Kofiloto, Principal Analyst at Informa Telecom's and Media, "With an estimated 130 million inhabitants, Nigeria is Africa's most populated country. Despite a high yearly growth (181% over 2004 and 96% over 2005), the country's penetration rate was still at 19% in September 2006 compared to 77% in South Africa at the same period. Nigeria is also a very competitive market with 4 GSM players and 5 CDMA networks actively involved in the mobile field".

As of September 2006, Nigeria counted 25 million mobile users. MTN lead the market as it held a 41% share. Globacom and Celtel controlled respectively 29% and 24% of the market, while M-Tel was at 4% and CDMA networks represented 2% of all the mobile users in Nigeria. (SOURCE: This Day)

Copper Thieves Continue to Be a Plague for African Telcos

Balancing Act's News Update 333 (26th November 2006)

This week, there are three further reports of damaging copper cable thefts from Namibia Telecom, Uganda Telecom and Telkom Kenya.

Telecom Namibia says it has suffered losses amounting to N$760 000 this year through acts of vandalism and copper wire theft. Telecom's senior manager for communications, Oiva Angula, said copper wire theft was on the increase, resulting in more telephone system failures in some parts of the country.

"In the past 11 months, over 26 copper theft incidents were recorded, and due to this, hundreds of subscribers were left without communication for days," he said. Most of the thefts occurred in the surroundings of Rundu, Dordabis, Swakopmund, Usakos, Otjiwarongo, Okahandja, Okatope and Windhoek's Hosea Kutako International Airport. Telecom Namibia has now joined forces with the Namibian Police to help prevent theft, identify stolen copper wire and arrest criminals, including their accomplices.

"The public too could play an important role in assisting in both the protection of these public assets and apprehension of such criminals to prevent the immeasurable inconvenience brought about when the telecommunication lines are interfered with," Angula said.

He called on members of the public to call the nearest Police station or Telecom Namibia whenever they notice something wrong. "Telecom Namibia pays handsome rewards to any member of the public for information that leads to a successful conviction or the recovery of stolen assets.

In the meantime in Uganda, power and telephone cables worth sh280m were recovered at Mpoma sub-county in Mukono in an operation aimed at curbing power and telephone cable vandalism. Umeme, Uganda Telecom (utl) and the Police conducted the operation. Four tonnes of dismantled cables were found in tightly-guarded and fenced premises.

Umeme's investigating officer Fred Masinde said the arrested suspects would help reveal where the cables are sold. "Electric and telephone cable thefts are on rampage since the year began," he said.

In Kenya, there were reports of cables being cut at the northern end of Waikayi Way, leading to service outages. Apparently police managed to detain a gang of copper thieves recently but did not have sufficient evidence to arrest the "Mr Big" who is behind a spate of similar copper cable thefts. A recent case showed that once stolen the copper is shipped by container to China. (SOURCE: The East African Standard)

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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