Zambia soon to feel the double-effect of international fibre and liberalisation

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This week’s news (see Internet section below) is full of stories about the impact of the Seacom cable on East African countries. With all this brouhaha, it would be easy to miss the way in which the landing of new fibre projects is galvanising markets further afield. Places that were once the sleepy territory of few competitors are becoming significantly more competitive. Russell Southwood spoke last week to Ian Ferrao of Africonnect, one of Zambia’s leading ISP players about what’s happening in the country.

Zambia is 80% dependent on copper revenues and the country’s fortunes have therefore fluctuated with the price of this mineral. However in more recent times it has seen a rise in tourism revenues, one side-effect of the political situation in Zimbabwe.

It has a population of 11.8 million, 40% of whom live in the main towns and cities, along the “line of rail” stretching from Livingstone in the south, through the capital Lusake to Kitwe and the Copperbelt further north.

Zambia has some of the highest prices for satellite on the continent with a duplex link costing between US$6,000-6,500. The first signs that things were changing came with the launching of a link put together by the Zambian power utility Zesco and Telecom Namibia on 1 July last year. As the monopoly international gateway operator, telco incumbent Zamtel was now connected to SAT3 capacity via a connection to Telecom Namibia on the border at Katimamulilo.

However, a second link is likely to open in the next six months on a route via Botswana to Neotel’s Seacom POP in Johannesburg which should lower fibre prices considerably. There are not yet any prices from Seacom but they are expected to be around the same price as those currently being offered in East Africa.

Other possibilities exist for further links like going into Malawi which will itself connect on to the landing station in Mozambique. There is a strong feeling that if prices do not come down to levels found elsewhere that companies other than Zamtel will finance additional links.

Ian Ferrao of Africonnect says that cheaper international fibre prices will almost certainly have an impact on domestic backhaul prices. The current costs on the important Lusaka-Ndola inter-urban route are currently much higher on a per kilometre basis than the international fibre prices being discussed. A volume price on the link on a test basis is US$4,000 per meg. According to Ferrao, metro fibre prices are also extremely high with one supplier charging US$1,000 to go 3 kilometres.

There are two major alternatives to the telco incumbent Zamtel for domestic fibre: Realtime Technologies which has a joint venture with the Copperbelt Energy Corporation and the national power utility Zesco. After the coming liberalisation, both will be able to make deals with international providers, adding further downward pressure on prices in the market.

There are 17 registered ISPs but only 9 play an active role. There are 18,000 subscribers, 12,000 of which are dial-up and 6,000 broadband. The latter are split between DSL and wireless. Zamtel provides a 64 kbps DSL service on its rather antiquated network and describes this as broadband and has around 4-5,000 of the broadband subscribers.

Africonnect says it has 900 subscribers who are split across residential, SMEs and corporate. The cost of a 128 kbps residential connection varies between US$50-150 with a 12:1 contention rate. The main competitors in the market are Realtime in the corporate market and Africonnect, Microlink and Coppernet across all other markets.

As elsewhere, competition in the Internet market from mobile providers is looming. The mobile coverage maps show that all 72 districts in the country have at least a signal in the district capital. Zain operates GPRS data services across its whole network, and EDGE in Lusaka and the Copperbelt, which is gradually to be replaced with 3.5G, whose roll-out is currently in the test phase, under a temporary licence from the regulator CAZ. MTN also offer GPRS/EDGE and have their 3G roll-out planned. Value added services on all networks include SMS, MMS and WAP. Zain also supports the use of Blackberry devices.

The regulator has a universal access scheme and is looking at ways of incentivising the mobile operators to supply services in the remaining less profitable areas. There are also a range of one-off projects supplying voice based with satellite delivery.

So what are the big changes that will come with fibre? According to Ferrao, it will be an upgrading of the access network and a steady increase in the number of value-added services:

” Firstly, we’re going to build an access level network so we can deliver to the customers and we’ll expand our coverage. Currently it’s using Motorola WiMAX to deliver service into 9 provincial capitals. But we’re now talking of fibre to the door for key corporate customers. An increasing number of users gain their access to the Internet either via Wi-Fi hotspots or Internet cafes”.

“We want to create an MPLS based network to improve the quality of data and offer video conferencing and other value-adds”.

Zambia’s new ICT bill has been signed by the President and it will do away with the international gateway monopoly. Regulator CAZ has announced this week that the previously exorbitant international gateway licence fees will be reduced to a level benchmarked on those elsewhere on the continent. Furthermore, 75% of Zamtel will be sold to a strategic investor with a further portion going to local investors. Unfortunately things have been held up by a local court case by Vodacom Zambia, which has no relationship to Vodacom South Africa. (see issue 467).

So with all these changes are there any signs of Triple play coming into the market? “There’s no sign of it at the moment. VoIP is illegal because of the monopoly international gateway. However, the new ICT Bill will allow VoIP. Then we’d look at delivering VoIP to residential and corporate customers. People are getting ready in the next six months”.

Africonnect also has a development subsidiary that runs a project called iSchool to deploy broadband to schools in Zambia with e-learning materials:”We’ve been running it for 2 years with e-learning materials. We have a proposal to get to the next 100 schools.” The current project delivers to 20 schools in rural, urban and high density locations.

The schools have been provided with free or low-cost connectivity, plus teacher training and support. A large website of free learning materials has been built, based on the Zambian curriculum. The teacher training and support is provided by Intel through their Teach programme.

African countries can use a combination of the arrival of the international fibre and liberalisation to spark a second wave of growth in Internet access and services based on it. The rather grim alternative is being in the slow lane for development and who wants to be the Central African Republic in times like these?