AfricaCom 2010 – Bigger than ever but wide-scale changes as the industry seeks to absorb changes

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The continent’s biggest telecoms talk-fest seemed to attract even more exhibitors and visitors than last year. Most people seemed to be relieved to have weathered a very challenging 2009 and are beginning to see signs of growth again in 2010. But there was an underlying nervousness as many parts of the industry sought to absorb the many changes occurring in the industry. Russell Southwood and Isabelle Gross look at the trends that seem to be emerging. There was much talk of Bharti Airtel’s focus on its OPEX costs through outsourcing and its ambitious plans to make an impact of several different parts of the industry outside of their own operations. Their focus on the cost side of the business will affect all operators and 2011 may be the first year in which we see mobile casualties. They won’t go bankrupt but be quietly absorbed by their competitors for less than stellar deal prices. The exhibition hall seemed to be full of “green vendors” offering every flavour of alternative energy supply for base stations: wind, solar, hydrogen and ammonia, you name it, they were offering it. However, no-one is offering something more simple such as an electricity transmission service that actually works. No report of such a huge event can ever do justice to what went on so what follows below is simply what we saw and heard that sounded interesting. * South Africa’s Internet Solutions is now offering its corporate customers a SIP client on their mobiles that looks for the nearest Wi-Fi hot spot. So whether the individual is on the company premises with a hot-spot or near one while he or she is outside the company premises, then their phone will use the Wi-Fi hot-spot rather than the 3G mobile network. Since Internet Solutions controls 80% of the South African hot-spot business, it has made payment alliances with a wide range of the hot-spot providers it supplies. Now imagine individual consumers being able to have access to a similar SIP client service. Soon a larger and larger number of people would be able to make IP calls using Wi-Fi and the mobile operators would be left with “the road”. OK, it won’t be as clear-cut as that but it could certainly provide a seismic shift in traffic. When you turn on your laptop in many African cities, there is a lengthy list of publicly available hot-spots. On another related front, Vodacom SA’s Elrina Montgomery discussed the changing world of international voice and data roaming charges: not changing enough in our view but don’t get us started. She identified two key competitors for international roaming: Skype (and others like Google Voice) on PCs and laptops and increasingly Skype on mobile phones. Reductions in Vodacom’s SA’s mobile data roaming charges led to an increase in customers but the same did not happen with the lowering of voice charges. Why? Montgomery said she thought that probably the reductions were not significant enough. The “blame game” on roaming charges is complicated as there are two parties potentially offering high charges but she did say that because the charges had not changed for several years they were unlikely to be related to underlying costs. Her central argument was that mobile operators had to start lowering their charges, improving their services and making them more transparent or the competitors would simply take it all away from them. * After the staggering increases in bandwidth capacity after the introduction of Seacom, TEAMS and EASSy, the pace of international bandwidth sales has slowed down somewhat. Some of those who bought large amounts of bandwidth are finding it hard to shift the majority of it. In the fast lane countries, the retail market is ramping up fairly rapidly but even with price drops, it’s taking a while for all the changes to work their way through. Nevertheless, the pace of national and cross-border roll-out continues and it is surprising to hear quite intelligent and well-informed people tell you that the problem will be having the national backbones to deliver it. The long-awaited Namibia-Angola fibre is now testing and will come on-stream before too long. Paul Hamilton said that in six months time that there will be fibre from the Cape to Cairo. But the issue remains the extremely high transit rates that monopoly (de facto or de jure) incumbents would charge to cross their countries. O3B’s MEO satellite service looks set to launch at the end of 2012 or Q1, 2013. * On the African Internet, the signals are coming in that show large-scale user growth. At the Opera Breakfast Briefing, the company presented research that showed its unique mobile users had increased 124% in the 12 months from June 2009 and that data transferred was up 160%. Top 12 users? South Africa, Nigeria, Kenya, Egypt, Ghana, Sudan, Libya, Tanzania, Cote d’Ivoire, Namibia, Mozambique and Mauritius. Top sites accessed included Facebook, Google, You Tube, Wikipedia, getjar, BBC and 61% of Opera Mobile users visit Facebook. Significantly, there has been an increase in the number of women using Opera on a mobile with 43.5% women users in South Africa (the highest in the world) and Nigeria having the lowest percentage in the world. 87% of Nigerian Opera Mobile users had virtual friends that they have never met. And it’s not just mobile internet that is showing that Africans want to use Internet services. ForgetMeNot Africa’s e-mail and chat service that uses SMS has now been signed up by Glo in Nigeria, Safaricom and Yu in Kenya and Econet in Zimbabwe. But the number of people in Nigeria using the service is shortly to pass the million mark. * Somehow the buzz was going round that mobile money is not succeeding on the continent outside Kenya. Meanwhile back in the real world, MTN Uganda has 1.6 million users and transfers worth US$70-80 million a month. Furthermore, Reg Swart of Fundamo, which supplies the software to MTN says that next month it will be launching a partnership with Western Union that will enable users in the diaspora to have money SMS’d to them from anywhere in the world in real time. * On the “green” side, India company VNL, showcased its WorldGSM™ Base Station which is solar powered. The BTS is suitable for rural environments where electricity is scarce or unavailable like in many African countries and ARPUs are very low. A UK based company, Diversenergy, presented its fuel cell baseload power generator, labelled “Powercube” which provides 1.2 kW of conditioned DC and claims a 60% reduction in OPEX. The interesting point is that the company is using ammonia rather than hydrogen as the energy source. Diversenergy has also a partnership with Afrox, a company that can supply ammonia anywhere in the world. There were also innovative green solutions for the mobile end users. A Finnish company named Suntrica was offering a solar charger for mobile phones labelled “SolarStrap”. Isabelle Gross spoke to Jouko Hayrynen, CEO of Suntrica about its charging solution and how it can help African mobile users to solve a main challenge for them – finding an electricity source to charge their mobile phone. Suntrica’s SolarStrap is a small square or rectangular pouch. When folded, it measures 144x95x25 mm. The front panel is made of a thin-film PV. It is a flexible panel specifically designed for harsh outdoor use. You can literally bend it in two without damaging it. According to Jouko Hayrynen, “even if you punch a hole in the solar panel, it will still carry on working”. When you flip up the solar panel front there is a lightweight battery attached to the back panel which stores the energy. Depending on the model (3 available at the moment), the battery capacity ranges from 3.4Wh to 5.5Wh. The battery with the highest storage capacity is more suitable for smartphones. Suntrica has specially designed a model for the iPhone and the iPod users. The SolarStrap comes with charging adaptors that are compatible with most mobile phones but also mp3 players, GPS devices, digital camera and other devices using a 5V charging voltage. What type of performance can an African mobile user expect from the SolarStrap? Well, according to Jouko Hayrynen, “one hour of solar charging time can for example provide 16 minutes of talk time or 10 hours of standby time. 8 hours of solar charging time will offer 2 hours of talk time and 78 hours of standby time”. Since the solar energy is stored in the battery, there is no need to hook up all the time the mobile phone to the SolarStrap. When the mobile phone needs charging, then the user only needs to connect it to the SolarStrap. The overall weight of Suntrica’s SolarStrap is between 60g and 65g depending on the model. The only downside is the price. The SolarStrap retails between €39 and €100 per unit. The priciest SolarStrap charger is the one for iPhone and iPod devices. Anyway, mobile users who can afford an iPhone are more than likely to be able to pay up to €100 for an energy friendly charging device. It is more the large majority of African 2G phone users that will be set back by the price. For Jouko Hayrynen, African countries should lower duty taxes on green energy devices to help make them more affordable to the population. In Nigeria, where Suntrica has just signed a distributor deal with local company OMAC Business Solutions Ltd, the duty tax is around 20%. Suntrica’s CEO remains confident that the company will be able to lower the price under €20 per unit in the next two years. The telecoms industry is absorbing a range of changes from a number of different directions and the smart operator will have to think hard about whether it wants to try and do everything as the market begins to mature.