Corporate use of MPLS in Africa drives data growth and bandwidth provision increases

Top Story

This week the mobile operators’ trade association, the GSMA issued a report saying that overall revenues from data would exceed those of voice by 2018. The steady shift of different traffic elements to IP will be with us sooner than expected. The report predicted that data revenues in Kenya would exceed voice by 2016, a mere three years away. As part of this broader trend, operators are beginning to gear up their MPLS services in Africa. Russell Southwood looks at what’s happening.

MPLS (Multi Protocol Label Switching) started back in the mid 1990s and was aimed at speeding up traffic between network nodes. Now its main advantage is that it is a much more controlled channel than public IP and can handle network protocols for voice, data and video. Typically, it has been particularly popular for corporate VPNs.

Indeed the main customers for MPLS services are international and regional corporates. According to Yossi Barkan, PCCW:”MPLS is certainly more expensive than the public Internet. But it’s 30-40% less expensive than buying the leased line, which it’s replacing.” So for example, a company might buy a 512 Kbps connection into a particular place and the services it wants to use flow over that connection. The operator supplies a managed router and monitors the performance of the network.

Improvements in international bandwidth have meant that corporate customers have been able to increase what they can do and how they operate. Before it was difficult or impossible to run certain ERP services over a satellite link. Now many organisations can centralize their ERP functions, whether with a head office in Europe or the USA or within the continent.

More reliable fibre capacity across the continent has increased the number of companies that are centralizing their data centre functions and providing more than one back-up option. For example, Ecobank has data centres in both Ghana and Togo.

For as Gilles Blanquart, Africa and Middle East Number one program manager, Orange observed:”Companies are doing business recovery in a wider number of places because of improvements in international bandwidth.” One of its customers, AngloGold Ashanti has a two recovery options, one in Johannesburg and the other in France and there is a “failover” between the two locations.

The new trading order means that one of PCCW’s customers, Huawei, has MPLS connectivity between its many offices in Africa and China. And obviously in the other direction. Likewise a Nigerian company may look for an MPLS link into India. But wherever the links are going, the biggest MPLS demand has come from African countries that are part of the “fast track” group in terms of growth: South Africa, Nigeria, Ghana, Angola and Kenya. The high-growth areas amongst corporate customers have been financial services and the oil and gas industry as new finds come on stream in places like Ghana.

Nevertheless improved business communication across the continent is still being held back regulatory restrictions in a significant number of countries. International MPLS operators often still have to deal with monopoly incumbent operators and are not allowed to run IP telephony and trunking. Connections that could as easily travel cheaply within the continent (if there were no incumbent protecting restrictions), are still being sent via somewhere outside the continent. The liberalization of cross-border connections would significantly lower the cost of business and trade.

The next wave of services and applications on MPLS is likely to include the use of video. One of Orange’s customers, AngloGold Ashanti, has 40 video presence points (with some run over satellite) with both standard and high-definition cameras. The next version up from that is immersive video (from the likes of Tandberg and Polycom) where those sitting round a table seem to be in the same room as those they are video-meeting with.

The competition between operators for corporate MPLS business is quite multi-layered. There are large continental players like Orange, PCCW, Etisalat, Airtel, MTN and Vodacom Business. These all project this pan-continental presence through a mixture of their own MPLS infrastructure and partnerships with local companies where there are gaps. PCCW has recently strengthened its hand by buying the carrier side of Gateway: it now has 27 countries covered through a mixture of its own nodes and those of partners. Some companies like BT and Internet Solutions are strong in South Africa but less strong elsewhere. Medium sized operators include companies like CMC Networks.

A company like Orange prides itself on the spread of its own infrastructure: it increased the number of its MPLS nodes from 16 in 2011 to 22 in 2012. It has also increased its international capacity by 46% over the same period and anticipates a further 50% increase in 2013.

If Africa’s strong economic growth is not held back by the economic troubles of the developed world, then MPLS will be a key driver of bandwidth growth over the next five years.

New Balancing Act video clip interviews this week:

Carsten Brinkschulte, CEO, Movirtu on its two new products aimed at the BYOD market

Manfred Tumban, CEO, SNS Mobility on his Cameroon MVNO

Video briefings on:

The roll-out of LTE in the UK market:

Ije Nwokorie, Wolff Olins on early lessons from helping launch EE's LTE service in the

Film and Music video platforms in Africa:

Yoel Kenan on the African music market, local talent, killing choruses and mobile digital platforms

Jesse Oguntimehin on the beta phase launch of African mobile music platform Spinlet

Chike Maduegbuna on Afrinolly, a new film and music mobile platform

Emma Kaye, Bozza on an African mobile platform to make music and films

Michael Ugwu, iROKING on Nigeria's Spotify-type service

Gado on Buni TV

To get up-to-the minute news, you need to be on Twitter. Follow us on a@BalancingActAfr