Olleh Rwanda Networks’ 4G wholesale network plans to have 95% population coverage by 2017 and looks to expand across Africa

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With the demise of Kenya’s idea for a 4G wholesale network, Olleh Rwanda Networks is the only fully implemented example of this type of model. Although not without its critics, it offers a very different approach to the speedy implementation of a national 4G network. Russell Southwood spoke to its CEO Patrick Yoon about its prospects.

Olleh Rwanda Networks is the product of the Rwanda Government’s determination to create high-speed broadband across the country. In partnership with Korea’s KT it has plans to spend US$100 million on the 4G network, of which it has spent US$65 million so far.

Firstly, it rolled out 3,000 kms of fibre across the country with 4 redundant rings. Secondly it has rolled out a 4G network. The latter currently covers 40% of the population but will cover 95% (11.4 million people) within three years. Both of these networks operate on a wholesale only basis. A wholesale monopoly has been granted for 25 years. Within this framework it offers value-added services to its wholesale customers like an LTE-powered security camera service which it launched in May this year.

The 4G network uses 800 MHz spectrum and the coverage is already 4 times that of 3G networks run by the mobile operators themselves. Rwanda’s transition to digital broadcasting met the ITU deadline but only by using a “hard stop” which left a significant number of viewers without a signal.

As a wholesale operator in a relatively small country market, its customers are the mobile operators (MTN, Tigo and Airtel) and 13 ISPs (including the Government’s satellite ISP New Artel). Its wholesale prices are between US$3.25-3.50 per kbps and a volume-based price of US34.85 for IGB per day for corporates.

Currently there are less than 10,000 4G retail customers in Rwanda but in three years time Yan forecasts that there will be around 500,000:”There will be a big change in the market.”

Obviously price will be a key factor in this big change and Yoon’s beef is that the mobile operators are putting too higher margin on the wholesale price:”Currently it’s expensive and customers are saying: why should I buy it? They do not have a clear understanding of the smartphone user experience.”

His biggest regret in setting up the service was not to have negotiated much lower retail prices in advance. Understandably the mobile operators want to “sweat” their 3G investments for a longer period and as in many places elsewhere, keep 4G as an elite service before beginning the price glide to something approaching a more affordable price. If the aim was to accelerate that market process, things are not currently going as fast as might be anticipated.

He has the same problem with the ISPs in the market who he thinks need to deploy a wider range of services at a better price for customers and gives the example of the need to offer bundled content to users:”We have been explaining to the ISPs that not all of them will survive, especially if the MNOs go into 4G in a bigger way. You should develop your own value.” In his view, only 2-3 independent ISPs are likely to survive.

To reach directly to retail customers to show them why 4G is so different, he has opened what might be described as a customer experience centre: users can come into 4G Square and try out the service and look at the kinds of things they can do on 4G.

They can also walk away with a 1GB data bonus if they become new subscribers. He says that through a special contract with Korean-owned Samsung he is able to offer the cheapest price in Rwanda on one of its recently launched handsets. The Samsung Galaxy J1 Ace is available for US111.

The criticisms of the network vary and are hard to judge from a short visit. It seems to me that 25 years is a very long-term monopoly contract alongside the scale of investment that will eventually go into the network.

When the contract was discussed it was reported that KT was pushing for a mobile operator licence and this has fuelled a certain amount of suspicion about its intentions. People I spoke to thought this was just the first foot in the door for an entry with wider retail ambitions. Also understandably they don’t share Yoon’s view of what has happened with pricing.

If this was a Faustian bargain to accelerate 4G adoption by getting a speedy national roll-out and low prices then it’s currently a work in progress. But as Yoon himself admits, this was a starter’s mistake and as he says this is “the first prototype in the world.”

He has had interest from other African countries and would like to explore these once the investment in Rwanda has proved itself financially:”KT has several overseas investments and therefore experience of developing ICT. We would like to increase our footprint and contribute to development. We have received two proposals and we are interested to extend these kinds of business models. But I need to make a success of this business first before expanding.”

“We made mistakes over pricing. If we launched in other countries, we have learned these lessons. 4G can be launched more quickly.”

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