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COMING SOON: RURAL TELECOMS SPECIAL AND HOW A MEMBER-OWNED ISP RUNS

WEEKLY PUBLICATION DEADLINE: 12 pm GMT Sunday.


ISSUE NO 123

AFRICA’S GREY MARKET - TECHNOLOGY AND MARKETS GO ROUND REGULATION

The grey market is where Africa’s comparatively recent regulatory regime meets the realities of the market and new technologies. There is a grey market in every African country and it will grow larger unless the regulators get to grips with why it occurs. It makes the international accounting rate system largely meaningless. Some grey market services operate in the margins of legality, whilst others are currently illegal. The smarter incumbent telcos are beginning to understand how to fight back but the regulators seem largely clueless. Tim Parsonson of Storm describes how the grey market operates in South Africa and how companies and consumers are finding a better deal.

The monopoly revenue streams of the incumbent telcos are locked in competition with grey market services. This should come as no surprise as new entrants always target the most profitable sectors. The new services can be found both on the incoming and outgoing calls:

- Outbound international voice minutes use "call-back" and pc/internet telephony.

- Inbound international voice minutes use what is known as "leaky PABX" (ISPs, local hotels and call centres, VSAT) and refile.

The problem is rife. On outbound international in South Africa, Storm estimates that 25-30% of corporate voice traffic is carried over callback or IP. And on inbound international traffice a well-informed insider from an African state telco told us:"A year ago, 9 out of 10 calls made by budget prepaid calling card from the UK and USA into the country, came over illegal routes". So an average telco carrying 100 million international minutes per month in and out of the country is losing 25% of the traffic in and out, and retaining only 25% of the revenue on the lost traffic. Therefore on these "guesstimates", it could be losing between US$10-30 million a year.

Worse still for the incumbent telcos, this traffic loss also occurs at the domestic level. Paradoxically, the shortest distance between two points is often the most expensive. To overcome this costly paradox, there are several forms of least cost routing already available in South Africa: these can be offered nationally, internationally and over cell phones. Least cost routing is enabled by technology (PABXs, switches) and deregulation (particularly interconnection).

International call-back is as its name implies a way of connecting the caller by calling them back from a cheaper calling regime like the UK. Against state telco charges, you can save between 20-50% on call charges. Is it legal? I understand that there has been a recent court case in Zambia in which it was declared legal. With fax, Storm can install a unit that allows you to send out a fax as data over IP connections, giving 20-70% savings. Legal? Certainly. On cellular, we can take advantage of connecting cellular to cellular (again with a unit) that offers savings of 20-30%. Legal? Yes. So if we look at a Least Cost Routing case study we can show the impact on the typical monthly bill of a corporate customer in South Africa:

Unfortunately current regulation prevents us offering cheaper calling. The unit Storm puts in costs only R5,000 so the customer easily recoups this in the first month. But this is not just possible in South Africa. Storm is already reselling its services through rebranded resellers in other African markets.

So how are the incumbent telcos reacting to this lost revenue? Well they can spend more on lawyers but that only tends to make the lawyers richer. They can invest heavily in "anti-call back" equipment and try DTMF/DDI blocking. They can send staff overseas to buy cheap phone cards and track where the calls come from. What’s the result? Well as with the lawyers, it means that more money is spent without radically increasing their revenue. The grey operators move services and re-appear faster than the telcos can track them. Furthermore there are now new DDIs for call back, offering new triggering methods.

If you cannot beat the grey market operators through recourse to lawyers or by trying to cut off their services what do you do? Well you try and beat them in the market. Telkom SA’s retail prices have fallen as follows for the following desinations (cents/minute):

And if you can’t beat them by lowering your rates, then you join them by buying the same technology that the grey market service operators use. The following incumbent telcos are already doing so: South Africa, Morocco, Zimbabwe, Nigeria, Ghana, Cote D’Ivoire, Senegal, Namibia and Egypt. And many others are actively looking at it.

If Storm has an inbound partnership with the incumbent telco it offers the following advantages:

- it can re-capture a portion of the illegally operated "leaky PABX traffic with targeted pricing and offering quality/compression.

- The independent operator makes the investment in the equipment.

- Lower cost outbound termination of international minutes through competitive new operators, outside of bilateral settlement agreements.

- You have the means to create flexible new services.

For more details about Storm: http://www.storm.co.za

This article is based on a presentation given at ACT 2002.

SIMPUTER NOW ON SALE IN AFRICA

Encore Software, the makers of the low-cost Simputer have appointed companies to market the machine across the world. The African company is African Digital Bridges which will handle marketing, distribution, and sales representation for Africa & the Middle East.

Encore Software began actual production of Simputers in July/August,2002 in Bangalore. They are ramping up a manufacturing plant in Malaysia, near Singapore. They received their first order for 1,000 units from MIT, which is launching pilot projects and incubation labs across Indian universities to create Simputer applications that are relevant to the poor. (eg. water/milk purity diagnostic device attached to the Simputer, education, telemedecine, micro-finance applications.) Encore has also received orders from the Indian government and rural banks.

Rizwan Rahim, ADB’s Marketing Director is currently promoting the Simputer at the World Summit in Johannesburg, through the Ubuntu Village exhibit, part of Greenstar’s US-based booth. There are live demos that are attracting much interest. ADB has started contacting local IT Solutions/Hardware distributor companies to explore partnerships to disseminate the Simputer as fast as possible via three channels:

- public sector "digital divide initiatives" (education, healthcare, e-governance, microfinance) As an example, we may soon be launching a pilot project via the province gov. of Gauteng in schools w/ the Simputer.

- commercial sector: private companies for applications in data collection and supply chain management (e-logistics) (industry examples: mining, hypermarket inventory, retail, statistics collection, etc.)

- potentially for retail as an "i-Paq/Compaq" alternative for local "black-empowered" entrepreneurial businesses, with the same and even more functionality, at half or three times the cost (locally, an i-paq goes for $1,100, while the basic Simputer goes for approx. $200, depending on sales volume, local duties and taxes.)

ADB plan to market the Simputer aggressively in Southern and Eastern Africa and in the Indian Ocean islands (Madagascar, Mauritius, Madagascar, etc.) For more details: Rizwan Rahim, Marketing Director,Africa Digital Bridges rizwan@africa-digitalbridges.com

SA’S TELKOM LAUNCHES COMMERCIAL TRIAL OF ADSL IN GAUTENG

Telkom last week began the commercial trial of its asymmetrical digital subscriber line (ADSL) service in Gauteng, ahead of a staggered national roll-out that will see an ADSL presence established in the Western Cape, KwaZulu-Natal, Eastern Cape and Free State by March next year.

"The first phase is a commercial trial in Gauteng that will be used to fine-tune various processes before we extend the ADSL footprint to other major centres," said Telkom’s Chief Sales and Marketing Officer, Pinky Moholi.ADSL is a dedicated access line to the Internet with a 256kbps upstream and 512kbps downstream speed. It is an always-on connection with uninterrupted access to the worldwide Web and instant e-mail messaging.

The service is charged at a flat rate with a differential for residential and business customers. The monthly ADSL line rental is R680 for residential customers and R800 for business customers, in addition to the normal monthly telephone line rental (R67.72 for residential customers and R89.97 for business customers) and call charges.

There is a once-off installation charge of R404. ADSL users also require a special modem and surge protection unit. Modems and surge protection units are available from Telkom, or may be purchased from external suppliers. Telkom charges R2 469 for an Ethernet modem or R2 067 for a USB modem.

KENYA TELKOM ADOPTS RAD’S MAP PLATFORM FOR CONVERGED ACCESS

RAD Data Communications and its East and Central African distributor, AdWest Communications, have announced that Telkom Kenya has adopted RAD’s Multiservice Access Platform (MAP™) as its main converged access platform for connecting customers to its SDH backbone and the Internet.

RAD’s MAP solution is based on deploying specialized equipment at the customer premises, in the local loop and at the carrier’s points of presence (POPs). Telkom Kenya has deployed RAD’s Megaplex-2100 and Megaplex-2200 multiservice access multiplexers, as well as its DXC family of digital access nodes, at more than 80 sites throughout its network. The products are used for carrier-class applications, including point-to-point leased lines, Internet access and E1 cross connection into and out of the SDH rings in the carrier’s voice trunk network. It has also been deployed in Neighboring Tanzania MAP has similarly been integrated into the telecommunication network of the Tanzania Telecommunications Company Ltd. (TTCL).

KENYA: UPGRADES DISRUPT MOBILE SERVICES

The two mobile telephone operators in Kenya - Kencell and Safaricom - have in the past week been forced once again to an incapacity to service their subscribers adequately - an allegation both providers deny. Reacting to recent claims that the mobile provider had failed to keep pace with its subscriber base, owing to constant call failures, Safaricom General Manager Michael Joseph said that the firm had the desired capacity to handle 300,000 calls per hour, but added that his company must sustain an already ongoing network upgrade.

He also denied that the firm had an insufficient supply of new lines, saying that over 20,000 lines were released to the market at the beginning of this month.On its part, Kencell, some of whose clients say they experience network overcrowding and are instead taken to voice mail service, denies such accusations.Said Public Relations Officer, Ndiga Kithae: "Voice mail service is one of our value added services that ensures our subscribers do not miss a call, if they are on another line, when the phone is switched off or out of coverage.

"Being diverted to voice mail does not mean the network is congested. The fact that you are diverted to voice mail means you can access the network."

Safaricom has a subscriber base of about 500,000, with a network capacity that can handle 700,000 lines. Kencell on the other hand, has a subscriber base of 465,000, against a capacity of 600,000.

(source: The East African Standard via DigAfrica)

NIGERIA: EXCEL TELECOM PLANS RURAL INTERNET SERVICE

Excel Telecom, a Nigeria based company, will on Thursday launch its internet service in rural areas not yet served by the "Public Switching Telephone Network (PSTN)." The project is a joint-venture with its long time partner RUTEL Corporation of Montreal, Canada.

The two telecentre pilot projects are located at Igbologun near Snake Island in the Riverrine area and Jakande "Low-Cost Housing Estate, Amuwo-Odofin" in Lagos State.The Igbologun site installation is equipped with internet wireless transmission devices and "state of the art" solar system to support power 24 hours a day. It will be coupled with a phone facility.

(source: This Day via DigAfrica)

GLOBAL TECHNOLOGY AND ICL TEAM UP

JSE-listed Global Technology Limited last week announced that it has entered into a partnership agreement with ICL Kenya Limited, that will facilitate ICL Kenya providing first line support services to the Kenyan market, as well as allowing ICL Kenya to act as a reseller of Global Technology’s products and services in Kenya.

For further information on Global Technology visit www.glotec.com

MOZAMBIQUE: SIEMENS WINS CONTRACT FOR MAPUTO NETWORK

Siemens Telecommunications has won a R95m contract to supply switching equipment to Telecommunications de Mocambique, to help modernise the country’s fixed-line network.Eleven sites will be equipped with digital switching technology that will increase the network capacity by 50% and give end-users access to more reliable voice and data services.

The contract will see equipment installed in areas around Maputo, starting this year and due for completion by early 2004. It will create local jobs in the installation and operation phase, and in the maintenance of the switching exchanges.

(source: Business Day)

IN BRIEF

- Nigeria Telecommunications Limited (NITEL) said it has completed work on the digitalisation of the telephone exchange in Abakaliki. A statement from NITEL, said the digital exchange has an installed capacity of 2,5000 lines and that the technical e-digital network was carried out and Ebonyi State capital admitted into the national network.

- The Guaranty Trust Mobile Banking Service has become the latest in the range of e-banking solutions provided by Nigeria’s Guaranty Trust Bank Plc (GTB).

- With Telkom announcing the availability of ADSL, first-tier Internet service provider (ISP) and network integrator, DataPro, says it is the first ISP to introduce this service to the marketplace.

- Technology distributors in SA who sell Compaq computers will not be axed once the new entity formed by HewlettPackard’s acquisition of Compaq consolidates its sales channel, the group says.

- Highway Africa 2002 published a charter to be used as a lobbying tool. If you would like a copy, send a message saying Charter to info@balancingact-africa.com

HCI TO SELL VODACOM STAKE TO VENFIN

Telecoms shares were all aflutter yesterday as Venfin announced its intention to buy Hosken Consolidated Investments’ (HCI) 5% holding in mobile operator Vodacom for "at least" R1.5 billion. Meanwhile, M-Cell shares fell on news of Nigeria reneging on its foreign debt obligations this year.

The Vodacom deal, if completed, will see Venfin, the investment holding company in the Remgro stable, increasing its stake in Vodacom from 13.5% to 18.5%. The other shareholders in Vodacom are Telkom (50%) and international operator Vodafone (31.5%).

HCI says it will use the funding to buy back 75% of its ordinary shares, which it says have been trading at a significant discount to net asset value. HCI has debt of R900 million on its books.

Rhys Summerton, analyst at Schroder Salomon Smith Barney, says the negotiations to sell the HCI stake are good news since this will allow for the eventual spinning off of Vodacom, either by a listing or outright purchase by Vodafone.

HCI shares were unchanged on the JSE yesterday, ending at 210c. At 10.30 this morning they were trading at 225c. Venfin shares fell 30c to R16.80 yesterday and were up 20c this morning to R17.

M-Cell shares plunged by as much as 85c yesterday, hitting a three-year low of 915c, on news that Nigeria had defaulted on $22 billion of its sovereign debt. They had clawed 10c back this morning.

M-Cell’s operating subsidiary, MTN, has extensive investments as a mobile telephone operator in Nigeria. It eventually recovered to 930c.

Summerton says the sell-off of M-Cell was unwarranted, since there is no connection between Nigeria’s sovereign debt obligations and M-Cell’s obligations in Nigeria.

(source: http://www.itweb,co.za)

PROPARCO FUNDS TELECOM INFRASTRUCTURE

The private sector financing arm of the French Development Agency (AfD), Société de Promotion et de Participation pour la Coopération Economique (Proparco), announced today it has secured investments of up to EUR350 million in developing African countries over the past four years. An example is a US$10 million equity investment in the AIG-African Infrastructure Fund, a major multilateral private fund devoted to large infrastructure projects with a continental scope. Another is a EUR5 million investment in the Axa-Bourbon private equity fund, whose geographical scope covers both the Indian Ocean and Southern Africa. As a lender, Proparco has provided long-term foreign currency loans to Rand Merchant Bank (RMB), a leading South African merchant bank involved in the provision of project finance transactions all over the continent. These funds have been on-lent by RMB to finance major long-term deals such as a telecommunications operator in Cameroon.

IN BRIEF

- Privatisation of Tunisie Telecom is now likely to be postponed until end-2003 or early 2004 given depressed investor sentiment towards the telecoms sector.

- The Global Technology (Glotec) share tumbled 10.5% last week ahead of a warning that it will report a decline in attributable profit.

GHANA: PORN HACKER TRACED AND IDENTIFIED

The Ministry of Information and Presidential Affairs’ issued a press release last week protesting the use of Ghana’s national flag on a porn web site. A Canadian was so upset that he went out of his way to trace the culprit. The Accra Mail published his e-mail which reads as follows:

"Yesterday, a friend in Accra alerted me to a pornographic website that paints a very bad picture of the women of Accra.

The website also displays a large Ghanaian flag. This website disturbs me very much as I have many friends in Ghana. I did a little investigation and discovered that the site is owned by a person by the name of Teddy Riley. His e-mail address is

assthick69@hotmail.com but his postal address is in Lagos. An attachment to this e-mail lists his address and telephone number.

Further investigation revealed that Mr. Riley’s website is hosted in Irvine, California by Prime Network. Another text attachment gives particulars of the servers. The internet address of this host company is http://www.primenetworks.com/index.asp The IP addresses of their two servers are 216.158.128.25 and 216.158.128.26

In summary there are three attachments, "registrant.txt" which gives particulars of the website owner; "table.txt" which gives particulars of the internet hosting company; and, "maptable-httpaccrawomencom.jpg" which shows the route that my signal made on the internet to reach the server in Irvine, California.

The path which really is not important, went from Ottawa (my location) to Toronto to New York to Chicago to San Jose to Los Angeles and finally to Irvine, California.

I am offering this information because I have many dear Ghanaian friends and I feel that this website does a lot of harm to the country.

I feel that the website should be shut down and a petition could be made to have that done. An alternate avenue would be to contact Mr. Riley and ask him to take it off the internet. A third method would be to contact Prime Network to remove the website. They may or may not be aware of the content of Mr. Riley’s website."

ZIMBABWE: TOBACCO GROWERS TRUST LAUNCHES WEBSITE

The Tobacco Growers Trust has launched a website that gives tobacco growers access to on-line input purchase and general information about the crop.The website - Agr-ecom- provides a one stop shopping facility for farming inputs, supplies and equipment. "Agr-ecom provides both farmers and suppliers with a new and innovative way of conducting business and exchanging information more efficiently.The result is reduced costs and increased productivity," said Mr Glen Wakefield a company spokesperson.

Farmers who log into the site would be able to view a wide range of supplier catalogues and compare prices. The website features catalogues from all the major agricultural suppliers. It also carries prices offered by retail outlets participating under the TGT programme.

(source: The Herald via DigAfrica)

IN BRIEF

* www.NetPulseGlobalPoll.com claims to be the first online global poll on sustainable development. It is being held as part of the World Summit in Johannesburg.

* Computer science students in Chandigarh, a city in northern India, have developed an interactive software program that can converse intelligently with people. Called Deepti, the "chatbot" program uses natural language to interact with people. "Deepti speaks in Hindi, and since the majority of people in India are computer illiterate and don’t speak English, this feature is really great," explains Ritvik Shajpal, one of the chatbot’s developers. The developers hope that, combined with touch-screen technology, Deepti will provide computer accessibility to people with little or no knowledge of computers. They are optimistic about Deepti’s future, saying that the program and its source code should be ready for release within four months. The developers hope that making their research available freely will encourage further research and improvements on Deepti.

(http://news.bbc.co.uk/1/hi/technology/2209775.stm)

* Addressing the World Summit in Johannesburg, Michael North, President, Greenstar said:"We asked ourselves: what kind of program would be more than sustainable - able to earn its own way? And it wasn’t programs that rely on continual donations from thousands of miles away.It was small businesses that stimulate people’s instinct for self-reliance, that are fueled by natural assets and talents they already possess. That’s how we developed the Greenstar ‘digital culture’ program, which markets original music, artwork, poetry, dance and legends from a traditional village to the world."

* In the opening plenary of Highway Africa, Dr Tawana Kupe, Head of Media Studies at Witwatersrand University started on a positive note with the potential of ICTs and related it to the potential of Africa, writes Eric Osiakwan. Dr Kupe agued that though there is a mass infrastructure gap there are the global, social and democratic inequalities that have a direct correlation to socio-cultural and economic development and until those issues are addressed it is impossible to realise the full potential of ICTs. Winners of Highway Africa awards were: Kubatana (non-profit section) and Afrikaleo.com (corporate). Runners up in the corporate category were: African Media Online and eLink Publications.

For full details on winners and runners-up: http://highwayafrica.org.za/awards.html

JOBS AND OPPORTUNITIES

* The South African Department of Trade and Industry has a down stream service providers withs access to non South African funding for telecomms infrastructure in Africa. Anyone requiring telecomms infrastructure funding email details of the project to: Robin Brown <robinbrown@corpdial.co.za>

* The new guidelines for core infoDev grant proposals are now available on the infoDev website http://www.infodev.org/apply.htm The deadline for applications for the next round of grants is September 30, 2002 and proposals may be submitted online.

* There has been a call for proposals for hosting of the AfNOG Workshop and meeting next year (2003) (AfNOG-4). The annual AfNOG event consists of a one week workshop followed by a day of technical tutorials and a day for the annual AfNOG Meeting/Conference. Closing date for applications: September 15, 2002. The successful host will be announced on 1 October 2002. Please find details of the workshop and meeting requirements as well as the planning spreadsheet for the event at http://www.afnog.org/hosting.html

DEAD TREES ROUND-UP: AITEC AFRICAN COMMUNICATIONS INFRASTRUCTURE & SERVICES REPORT 2002/03

Africa’s total international bandwidth has more than doubled in the last year, mobile has overtake fixed-lines and Africa has some of the fastest growing mobile markets in the world, and new partnerships with the private sector are being forged as an alternative to privatising PTOs, writes Paul Hamilton. Yet private oligopolies threaten to supplant public monopolies, Internet user growth has slowed to some 20% per year, and a strange case of missing Internet content eludes would-be users. These are some of the key conclusions of the first African Infrastructure and Services Report just published by AITEC.

The report begins with a critique of the telecommunications regulatory environment in African countries, and then provides a regional status of the policy frameworks for information and communication technologies (ICTs). The report then goes on to provide a detailed inventory of the regional telecommunications infrastructure underpinning ICTs in Africa, and an analysis of the new service offerings which are being introduced by fixed-line and mobile operators, Internet service providers (ISPs) and satellite service providers.

There are a number of limiting factors on the growth of ICTs in Africa. Cost is a key constraint, which creates a number of seemingly irrational paradoxes: even though Africa has some of the poorest countries in the world, it has some of the highest costs for international calls, for mobile services, and for international bandwidth. Consequently, it is more expensive for an African ISP to operate than its counterparts elsewhere in the developed world. Some of the new services which are being offered are based on new business models which help to radically lower costs and address the market. Prepaid billing, a concept which had one of its first successes in the African market, has driven the growth of mobile. The introduction of new low-cost satellite-based services has increased the availability of bandwidth. Voice over Internet protocol (VoIP) has become an importance for international calls, and the first adopters of the free ISP model are beginning to appear in the region. These models and technologies, in turn, present challenges to the established regulatory environ

The report concludes with an ŒAfrican Connectivity model’. Based on the premise that all international bandwidth is procured either by satellite or regional fibre connectivity, the model puts all projects in time series and demonstrates the evolution of international bandwidth over the last five years. The report also contains an optional CD-Rom with full electronic copy of the Africa Connectivity Model, and a supporting library of satellite footprints, regional fibre projects and telecommunication indicators.

ŒInternational Internet bandwidth has expanded substantially - up over 100%, from 700 Mbps of available outgoing bandwidth in 2001 to 1,500 Mbps in 2002’ says Mike Jensen, Independent Telecommunications and Internet consultant, in his chapter on Internet infrastructure. ŒThere are a variety of reasons for this substantial growth, most notably: the increasing use by Internet service providers (ISPs) of low bandwidth via satellite to augment their existing links, the greater demand by a maturing user-base for more bandwidth (including for VoIP), growth in use of public access facilities (cybercafés, business centres) and also because of the lower pricing for bandwidth created by new supplies from satellite providers and the establishment of the new Sat-3/WASC submarine fibre cable along west Africa.’

Africa’s total upstream international bandwidth can be accounted for by the established regional fibre and satellite connectivity:

- Regional Fibre Projects. Chapter 5 looks at existing and proposed regional fibre projects in the region. ŒWhen the Sat-3/ West African Submarine Cable (WASC) and South Africa &SHY; Far East (SAFE) cable entered commercial service at the end of May 2002,’ notes Paul Hamilton, the editor and a contributor to the report, ‘they brought an extra 30 Gbps of international capacity to alleviate the bandwidth demands of African carriers, operators and Internet service providers (ISPs). At least one other undersea (Œwet’), and four overland (Œdry’) regional fibre projects are also in the pipeline, which promise to overcome the shortfall of bandwidth to carry international voice and Internet traffic. However, the crux of such projects lie in their economic viability, and how they can recoup the huge investment required’.

- Satellite. Chapter 6 looks at the continued dependency on satellite for international bandwidth, at new services which are becoming available, and at the changing structure of the satellite service provider’s market. ŒNearly all of Africa’s international bandwidth is provided by satellite. Except for those countries which are connected to and utilising submarine fibre-optic cables (Algeria, Djibouti, Egypt, Morocco, Senegal, South Africa, Tunisia, Canary Islands and Cape Verde), satellite presents the only means of carrying international traffic other than links they might have with immediate neighboursŠ As a result, African countries have a very high dependency on satellite: in the majority of countries more than 95% of international traffic carried by satellite’.

The existing satellites above Africa are heavily subscribed. There is simply not much capacity left, and it is increasingly difficult to lease capacity on them. However, new satellites are being launched - notably Intelsat 903 launched on 30 March 2002, New Skies Satellites (NSS) 7 on 16 April 2002 and Stellat 5 on 5 July 2002.

The report examines a number of new service offerings being implemented by operators, which have the potential to further unlock African communication markets. These includine:

- Voice over Internet Protocol (VoIP). Chapter 3 provides an overview of the fixed-line sector, including the privatization of PTOs, the introduction of competition, and the increasing legal and illicit use of Voice over Internet Protocol (VoIP). ŒThe use of Internet Protocol (IP) Telephony in Africa has long been an open secret,’ notes Paul Hamilton. ŒSeeing the opportunity to bypass the extremely high prices charged for international calls, a number of small, informal and illegal operators exploited this opportunity and undercut the public telecommunication operators (PTOs). In Africa, industry sources estimate the extent of this grey traffic to be between 10% and 70%, depending on the country. However, an increasing number of African PTOs are themselves using VoIP to carry international traffic. Ironically, service providers such as iBasis, ITXC and Gateway IP point out that PTOs can use IP telephony as a defence against illegal bypass to recapture the illegal traffic. Without the caller ever realising it, an increasing proportion of PTO calls flowing into and out of Africa now travel at least part of the journey using IP’.

- Mobile Data. Chapter 4 charts the rapid growth of mobile in Africa, and concludes with a breakdown of mobile data applications which are entering service. In Nigeria, the number of mobile subscribers has overtaken 1 million within twelve months of the two operators first cutting over service in August 2001. A number of operators have deployed circuit-switched data (CSD) onto their networks, one has deployed high speed circuit switched data (HSCSD) and at least six are deploying general packet radio services (GPRS). For the time being, the majority of African mobile operators have yet to make the investment into mobile data, concentrating first on the burgeoning voice market and uncertain of the commercial viability of mobile data. Increasingly though, some operators are using other platforms to deliver a range of locally-tailored information services through existing second generation (digital) mobile phones &SHY; including short messaging service (SMS) and Interactive Voice Response (IVR) services.’

- Free ISP. Chapters 7 and 8 provide a detailed status of the Internet in Africa, and also looks at the early adopters of the free ISP model in the region. ŒThe rates of [Internet] growth seen in the 1990s have slowed in most countries as the bulk of the users who can afford a computer and telephone have already obtained connections,’ says Mike Jensen. ŒAs of mid-2002 the number of dialup Internet subscribers was close to 1.7 million, 20% up from 2001, mainly bolstered by growth in a few countries such as Nigeria.’

ŒThere are three key business factors that will affect the growth of the Internet in Africa: the cost and availability of technology, the price of access and the availability of content (and services) relevant to African users,’ points out Russell Southwood, Chief Executive of Balancing Act in his chapter exploring the "Strange case of the missing Internet content". ŒOf these three factors content (and services) is arguably the most important. If the Internet does not have any Œuse-value’ for African users then it will remain a marginal technological curiosity that is in no way central to anyone’s life. But if content is really so important why is there so little of it in existence?’

So far, only four African ISPs have launched free ISP services &SHY; and two of these have been without a revenue-sharing agreement with the PTO. The free ISP model represents a symbiotic relationship between ISPs and PTOs. Elsewhere, fixed-line carriers have been willing to share a proportion of the extra revenue brought by additional incremental traffic that free ISPs generate, since users dialling up to free ISPs create larger phone bills. ISPs effectively create much larger demand for minutes to be supplied by PTOs. Vice versa, the ability for ISPs to waive subscription charges has allowed them increase the size of their potential market, and also undercut rival ISPs. Elsewhere in the world, the model has powered the growth of Internet in much the same way that pre-paid billing has done for mobile usage. The first two free ISPs were launched during 2002.

The African Communications Infrastructure and Services Report 2002/03 can be obtained from AITEC. AITEC http://www.aitecafrica.com

For further information email michelle@aitecafrica.com

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