Africa’s annual gabba-gabba fest AfricaCom took place recently with the organisers claiming that visitor numbers were up yet again.
Vendors from almost every corner of the globe were there with heavy representation from both India and China.
AfricaCom has become exhausting but necessary meeting place for many of the different parts of the telecoms industry, having expanded from its original GSM Africa footprint.
This year it went off in search of even more territory with the addition of Enterprise ICT and Africast streams, the latter for broadcasters.
The whole process has steady momentum which means that if you gather the equivalent of a small town together, your chances of meeting people will increase.
No account of an event of this size will ever capture everything that happens and many of the stories below in the news sections are drawn from announcements at the events, including the winners of the awards event. (note to Orange: You have much to shout about so don’t enter every category multiple times.)
Some of the key threads that we saw emerging at the event were as follows:
* International bandwidth growing again: After a period when people were going, we’ve got all this bandwidth what are we going to do with, international fibre sales are on the move again. According to Chris Wood, CEO, WIOCC it has almost completely sold its initial 30 GB allocation and will upgrade to 160 GB which he thinks will sell through in 2 years. The drivers for all this growth? Mobile Internet and WiMAX coverage.
ACE had a stand for the first time but whilst the project makes steady progress, it has not yet funded its South Africa leg. This is perhaps not surprising given the fact that WACS has all major telcos signed up. WIOCC has also signed an agreement with WACS to give it a west coast redundancy route.
* The steady growth of national and cross-border terrestrial but price and access still issues: You still meet people who tell you that it might be true that Africa has all this international bandwidth but there’s still no routes from the landing station. Clearly there’s a perception lag operating. Chris Wood, WIOCC told us that its consortium members now have 50,000 kms of cross-border fibre with lower cost transit prices.
Liquid Telecom’s network stretches north. There are gaps everywhere between these clusters of networks and some blank spaces (as Eric Osiakwan of Ghana Connect pointed out in his presentation) but the task of addressing this is far less daunting. Those endless maps with coloured lines that were “meat and drink” of conferences like this for several years are now a reality. Pricing remains an issue at both national, cross-border and local levels. Holding back the development of things like data centres and cloud computing, the latter being something of a buzz word at the event. Two telcos this week – Vodacom SA and Orange Kenya – have plans to get it beyond the “blah-blah” phase. One operator was saying that international bandwidth was now 20-40% of total delivery cost with national bandwidth making up 60-80%.
* Satellite operators seem to have weathered the fibre storm: Satellite operators and resellers were remarkably chipper this year compared to last year. SkyVision’s new CEO Doron Ben Sira said revenues were holding steady and that it had moved from drawing most of its revenues from 4-5 countries and was equivalent amounts of revenues across 20 countries. Operators have seen their IP trunking business disappear and the number of remote base stations is falling rather than growing but they have got out and found new customers. “All the world and its aunt” are getting into the broadcast business where prices remain rock solid: how about some competitive offers?
SkyVision is offering fibre in West Africa but sees it as “niche play” where it can use fibre to create a package of connectivity with good overall margins. C-band capacity availability is low, not helped by the antenna of the New Dawn satellite not opening. Jonathan Osler of Intelsat says he dreams that one morning he will wake up and it’s happened but he says it’s unlikely.
On the near horizon, Kevin Viret of Yahsat says it will launch its new products early next year and says both pricing and sales channel approach “will shake the market up.” Further into the future 03B is still looking at a 2013 launch date with prices (depending on volume) between US$500-750 per meg. It has changed its business model slightly to offer slightly sub 100 MB offers asymmetrically. However, the idea that it will be good for redundancy purposes looks less and less compelling as the volume of fibre being shifted keeps ramping up.
* Mobile content gets more and more interesting: Google’s Think Mobile event on Monday was pitching the growth of smartphones in the South African market, which is probably right. But the “ground-moving” moment seems to be happening with the much more numerous feature-phone part of the handset pyramid.
We met Australia’s biNU mobile who have a feature phone content platform that has over 2 million users globally. It’s a low bandwidth optimized cloud-based service and it offers an extremely interesting content offer including books from the Guttenberg Project. It is getting user numbers in the hundreds of thousands and these are undoubtedly the early birds on the horizon.
Comparing notes on mobile content in India and Africa with Arvind Rao, CEO of OnMobile was fascinating. He is part of what seems like a wave of Indian vendors who have followed Airtel into the market. He says that his sales in Africa are ahead of where he expected at this point. He told us that one big trend in India was independent musicians using mobile as a means of distribution. He also said that Indian music labels three years ago had something like 5% of their revenues from online but now they had 40-50% and of that proportion 80% was coming from mobile. Furthermore with the rise of independent music distribution and increased digital sales, the negotiating power of the labels had decreased, allowing sensible royalty deals to be done.
At the higher end there’s a steady trickle of people offering VOD content. One of these companies Logiways offers a satellite-based, smart set top box service (costing US$200) that can serve movies. The box is controlled by the operator and can download a whole set of new movies on a monthly basis and stream them to consumers. Kenyan Fibre-To-The-Home operator Jamii Telecom told us that amongst its first small number of subscribers, 65% use their new bandwidth for downloads.
On the content front, the Nation Media Group has had 84 million views on its YouTube channel over 3 years. Given that serious income from online advertising on platforms like these starts at around 1 million views, the content moment is finally coming into view. Or another example, Young Africa Live on the Vodacom platform in South Africa has 586,000 unique views. Mobile is well and truly media but current media owners have yet to wake up to this new dawning reality.
* Mobile payment – when will the interconnect moment arrive? When mobile operators first started, operators didn’t connect to each other because they believed that people would prefer their service and in this fashion it would attract greater numbers. And then someone agreed to interconnect and the networking effect kicked in and the rest is history. M-money is going through a similar cycle but below the radar there are a number of operators that are not completely happy with their proprietary, on-net solution.
The Nigerians have set the pace by saying platforms must operate with the banks which has meant a slightly more open process of platforms getting to market. Platforms like Paga in Nigeria and Mobipay in Tanzania (still just 100,000 subscribers) may currently be small in user numbers but may suddenly they may become flavor of the month. The issue for operators is that M-Money is not a highly profitable business but as with everything mobile, they do it because some else started doing it.
Larger players are taking an interest. POS operator Verifone has bought into New Zealand’s Mobilis and is offering an m-wallet platform that has Near Field Communications on its “road map”. The current barrier to retail shopping in places like Nakumatt with say M-Pesa in Kenya is that the check-out staff and customers can’t be bothered to go through the slower process of paying this way. Cash is still faster but imagine a swipe and pay system. It’s a ways off but it’s coming…