New connectivity to boost sub-Saharan Africa

Extending reliable communications infrastructure beyond the major urban centers and to the rest of the world will be a key element in the economic development of sub-Saharan Africa.

For some time sub-Saharan Africa was the "odd man out" when it came to international subsea cable connectivity, particularly along its east coast. However, various planned and recently completed projects are boosting the region's communications links with the rest of the world.

This improved connectivity can play a role in helping the 40-plus nations in the region to escape the worst effects of the global recession. The IMF says that the economies of sub-Saharan Africa have shown surprising resilience and the economic potential of the region should not be underestimated. Its October 2009 publication, Regional Economic Outlook: Sub-Saharan Africa, acknowledges that although growth this year is unlikely to exceed 1%, the region will be benefit quickly from the upturn in the global economy to post growth of 4% in 2010.

"Having these additional cables also creates competition in the market..."

According to World Bank figures, the region's GDP exceeded $740 billion in 2008. Oil is a major export and the region has suffered from falls in demand due to the reduction in global economic activity. The sub-Saharan metals market has experienced similar price falls, although non-metal commodities (cocoa, coffee, sugar, tea and wood) have experienced fewer peaks and troughs and are trading more closely to the oil and metals market than at any time in the second half of this decade.

Lindsey McDonald, ICT Industry Analyst at Frost & Sullivan says that lack of bandwidth in the region has stifled innovation and prevented companies from taking advantage of new business opportunities. "Having these additional cables also creates competition in the market, which should help to put downward pressure on prices and, as technology improves, it should be possible to increase the capacity of the cables through upgrades."
The new international links include the second phase of the Lower Indian Ocean Network (Lion) cable, which is being built by a consortium that includes Orange Madagascar and France Telecom. It will connect to the Kenyan coastal city of Mombasa, where it will then link to the South Africa-East Africa-South Asia-Fiber Optic Cable or Seacom. Lion will also be connected to the East African Marine System and eventually to the East African Submarine Cable System (EASSy), which will fill in the last major gap in the international submarine cable network.

True potential

Earlier this year, France Telecom also announced that the Africa Coast to Europe submarine cable system, which was initially planned to stretch from France to Gabon, would be extended to South Africa - connecting all countries along the west coast of Africa from Morocco to South Africa.

The true potential of these cables won't be known until the infrastructure is in place to take connectivity from the coast to inland regions, says Frost's McDonald. "It will be interesting to see whether this will provide an incentive for these governments to increase their spending on telecommunications," she says.

Options include infrastructure partnerships with companies from industries that rely heavily on telecommunications links in remote areas (such as oil exploration and mining) and initiatives like the Ghana Investment Fund for Electronic Communication. Each operator in Ghana contributes one per cent of its annual profits into this fund, which is used to finance telecom masts and power sources in under-resourced areas.

Key role of wireless

However, the bulk of any investment is likely to go into mobile and fixed wireless services. The World Bank's Africa Development Indicators 2008 shows that while 17.5% of the population are mobile phone subscribers, just 1.6% have access to a fixed line and, at a recent summit of the International Telecommunications Union, Secretary General
Dr. Hamadoun Toure said that at the beginning of this year, there were more than seven million mobile broadband subscribers in sub-Saharan Africa.

AfricaNext Investment Research predicts that more than half of the 10 million new broadband subscribers expected by 2012 will use "mobility based solutions," with a further 7% using WiMAX and other fixed wireless broadband solutions. Independent telecoms research firm BuddeComm reports that at least 20 African nations are trialing WiMAX services.

Satellite remains important

In the meantime, satellite will remain the only option
for many companies in sub-Saharan Africa, and there
has been significant investment in new satellite launches
in recent years to address issues of capacity.
Orange Business Services has several customers whose entire regional network is carried via satellite, including global energy firm Chevron, Standard Chartered Bank, brewer SABMiller, Ghanese bank SG-SSB, gold producer AngloGold Ashanti and several ministries of foreign affairs.

"Service availability depends on what the customer wants to do and where."
 
The sheer diversity of the nations that make up sub-Saharan Africa is reflected in the region's telecommunications market, explains Geoff Connor, Senior Business Development and Account Manager. "Service availability depends on what the customer wants to do and where. Power and telecoms infrastructure in the capital cities is reasonable, but companies operating outside the major urban centers face real challenges."

While alternative operators have made headway in some national markets, most are still dominated by the state phone company. The extent to which governments exercise control via the industry regulator can be oppressive, but there are signs that protectionist attitudes are softening, particularly in those countries whose natural resources attract inward investment. "International companies operating in industries that are seen to be vital to the country's economic success - for example, the financial services sector in Nigeria - are incentivized," continues Connor.

The typical Orange customer in sub-Saharan Africa is a multinational requiring connectivity across multiple territories, examples being building materials supplier Lafarge and Standard Bank of South Africa. The greatest challenge, admits Connor, lies in connecting domestic branch networks.

In a relatively immature telecommunications market, the logical first step is to offer connectivity. "Over time you can talk about value-added services, such as IP telephony and videoconferencing, but you need
to be providing the network before you can talk about products such as disaster recovery and hosting," he concludes.


Orange Business Services in Africa

Orange has been a major player in African telecommunications since the early 1960s and
has developed an extensive network infrastructure across the continent. Orange Business Services has the most extensive IP VPN coverage of any operator, including an IP VPN gateway in South Africa.

The company has a domestic presence in 17 sub-Saharan African nations, including Senegal, Mali, Ivory Coast, Cameroon, Kenya, Uganda, Botswana and Madagascar, and operates in every country in the region. Orange also operates an extensive satellite network that is used for network trunks (primary and back-up) with 21 network trunks to 18 locations in 14 countries.