Africa’s corporate data market follows consumers and starts to make major transformation

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For years corporate data customers were the cash cow of operators as they were unable to resist paying ransom prices for basic bandwidth. Now data availability and prices in Africa’s capital cities may almost match those found in the USA and Europe. Russell Southwood looks at how these changes will affect Africa’s corporate customers and operators.

One of the larger international bandwidth suppliers in Africa recently told me: “Corporates will be able to do the same as they can anywhere else (in the world) in 3-5 years time”. His only caveat was that this kind of bandwidth service would only be available in the larger cities and capitals. The question then is how quickly does can convert into will amongst this category of customers?

The shift amongst individual consumers in Africa was created by three things: the arrival of adequate bandwidth; the bandwidth being available at the right price; and changes in behaviour. The latter was spurred by the popularity of new forms of content like You Tube and of social media like Facebook, MXit and other similar platforms.

Though it may seem strange to think of the corporate in the same, it will be affected by similar kinds of factors. Managers of international and regional companies may have access to fancy phones but when they leave the office, they are just another individual consumer.

So the kinds of behaviour changes that have affected individual users – who now consume more data and use different content and services – will begin to feed into the corporate space. The most obvious examples are Bring-Your-Own-Device (BYOD) and the widening spread of Skype use.

Also there is a continuing downward pressure on the price of corporate bandwidth. If consumer bandwidth is getting so much cheaper, the corporate manager is almost certain to ask:”I’m being charged 3-5 times the amount that ordinary consumers are for my bandwidth, what I am getting that’s 3-5 times better?” And the answer as things stand will not be reliability and resilience.

So where are you taking this, I hear you ask? In future, selling bandwidth to corporates will only be a small part of the mix. Operators will sell products that sell bandwidth: to give it the full cliché, value-added services, things like security, cloud services and VoIP.

To illustrate the point, let’s look at those people who used to sell satellite bandwidth. When fibre arrived, satellite bandwidth sellers moved from being the near sole providers of Africa’s bandwidth to niche players. Some of those niches (like broadcast) were long contract and very profitable but new business largely in remote places off the fibre network. So these satellite operators had a dilemma. When the corporate customer tendered for its bandwidth needs – both satellite and fibre – what did you say to them? Oh, we can only do the satellite bit for you.

So now operators like SkyVision are positioning themselves as solutions providers and are not only selling satellite bandwidth. According to Ofer Farkash, Product and Business Development Manager, SkyVision:” In terms of submarine fiber, we currently utilize capacity over Main one and Glo-1 for our terrestrial network in Nigeria, and ACE for our terrestrial network in Guinea Conakry”.

The new portfolio of services includes: mobility services; VoIP; managed networks (including remote network management and maintenance); VPN clouds; other cloud services; data centre resilience and data security and integrity.

One example from SkyVision is the batch of VoIP services it has released aimed at international, inter-branch use:”We want to offer low-cost voice services that can be supported using an analogue terminal adapter and we’re also providing a soft phone application.”

In something that shows the consumerization of corporate demand, it is also offering apps for both Android and iOS phones:”The customer has a single account and can use it on multiple devices: the desktop in his office; the softphone on his laptop or tablet; or the app on his mobile phone.” The whole thing can be operated with a couple of different low-cost calling applications: for example, calls are US2 cents a minute to most destinations in Europe. This is obviously cheaper than either fixed incumbents or mobile operators can provide.

So the key shift for operators at this level is that they have to have staff on the ground to actually deliver these services. You can’t simply beam them down, however much you might able to trouble shoot them remotely. So SkyVision now has 40% of its staff in what it describes as the strategic markets it services.

Most of Africa’s incumbent fixed line operators are only in one country but the high-value corporate customers have multiple locations on the continent. Many in extractive industries have offshore and remote locations.

The buying decision for both bandwidth and these “value-added” services is complex. It may be in Mumbai, London or Beijing but the overall decision may be qualified by local managers sitting in Nairobi, Lagos or Dakar. They may not make the decision but they shape its implementation and for years they have had every right to sing the refrain:”But this is Africa…”

In the medium-term, international managers will put pressure on them to stop making this excuse and focus on the global delivery standard across the company in question.

Operators need not only to be able to deliver across Africa but also globally and across south-south regions. The new corporates are coming out of China, India and Brazil into different parts of the continent and want to know what’s happening in their new operations. Therefore operators will need to be able to have global presence in all the key locations where corporates need them. No-operator on the continent has this kind of global omnipotence so no-one can do everything.

This kind of sales and delivery effort is put together through what might be called a Star Alliance approach. Customers are offered a seamless global network delivered by different companies to an agreed standard. So for example, a local incumbent might work with a company like Tata Communications to deliver certain global services: each takes on a different part of the task.  In the case of SkyVision’s VoIP service mentioned above, the company is working with an internationally well-known provider.

All these Star Alliance services have to work seamlessly and to the same standard so again the “this is Africa excuse” has to be eliminated for all practical purposes.

So how quickly will Africa’s corporate customers head into this new promised land? Unfortunately the CTOs or their equivalents in most of these corporates are still driven by the kind of cost-cutting mentality brought about by years of high cost bandwidth supply.

One corporate bandwidth seller told us that he was selling a back-up service to an international bank that blended different fibre suppliers and some satellite capacity:”Would they pay slightly more for it? No, they wanted it for the same price as the fibre we’d given them.” Another bandwidth supplier recounted what was almost a downward auction by phone to get a corporate customer’s business.

The challenge is to changing the narrative so that these “value-added” services are not simply seen as a device for getting more money out of existing customers. Also “head office” needs to know that what can be delivered in Africa is rapidly improving. Operators – whether previously selling fibre or satellite capacity – need to be able to show themselves equal to the task of demonstrating the business case for value added services.

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