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Leaping the generation gap

Africa's traditionally poor telecoms infrastructure has created huge pent-up demand for telephone services , a demand that suppliers of new wireless services are rushing to meet. New technology can help Africa leapfrog several generations of development, reports Munyiwa Moyela, introducing our Special Report on African Telecoms.

The world's developed economies liberalised their telecommunicaions environments onlyafter they had acheived a considerable network expansion.In Africa the reverse is happening. The continent's emerging economies are in a hurry to use technology to grow their telecommunications markets and consequently their economies. Africa may still be the land of electrical blips, analogue and digital potholes but the future of African communications looks bright.

From Cairo to Cape Town, to Lagos and right across to East and West Africa the telephone market is brimming with "confused organisation", new technology, local start-ups, foreign investors, epileptic financial tides, hopes of regulatory rejuvination, open market dogma and the quest to use wireless local loops to leapfrog the continent into the future.

A recent report commisioned by the Commonwealth in London notes thst 95% of the world's population is yet to connect to the Internet. By extension, this means that a huge chunk of the global village may never have used a basic telephone, and the Internet is being touted as the "multi-media backbone" of the future. But much of Africa is still struggling to cope with "colonial infrastructure"- analogue public switched telephone networks (PSTNs).Unfortunately, unlike in North America, Europe and much of Asia, the telecommunications sector of the "emerging region" that houses 50% of the world's poorest nations must "compete" for funds with agriculture, healthcare, housing, transport and defence. But telecommunications is one of the pillars of any modern economy, along with transport and energy.

By Western standards most of Africa is poor and rural. The difference between Africa and the rest of the world today is that, while Africa is still saddled with 20th Century aches and pains, the rest of the world is busy creating the wireless economy of tommorow's world. The challenge for Africa then becomes how to use the technologies of telephony as a shortcut to acheiving its hopes. But Africa is still a hard sell.Part of the present problem arises from two fundamental observations:the continet is slow in adopting global trends and too often local and international media potray largely negative images of Africa when there are success stories to be told.

People in South Africa ,Ghana, Mauritius, Botswana, Uganda, Egypt, Swaziland and Namibia enjoy relatively "strong" access to analogue and digital telephny and their value-added products and services. Mauritius, with 1 million-plus citizens has the highest teledensity in Africa. Privatisation is gathering pace on the continent, with state-owned telcos in Lesotho, Malawi, Tanzania, Zambia and Zimbabwe already well on the way to being divested from sole government ownership.Ghana championed a duopoly in its telecoms sector as a matter of policy.In East Africa,Uganda, Ethiopia and Kenya have opened up their telecoms sectors. The government of Uganda ,supported by Unesco and the International Telecommunications Union (ITU) , has invested over $50 million in telecentres.

West Africa's slow telecoms sector reforms derive largely from Nigeria's inability to sort out its weaks regulatory environment.A Commonwealth affiliate, the Commonwealth Telecommunications Organisation (CTO), has just been to help guide the Nigerian Communications Commisions (NCC). Once 100% state-owned, Senegal's Sona Tel is now jointly owned by the state, foreign investors and its employees.

South Africa is one of world's fastest-growing mobile phone markets.The sale of 55% equity of Telkom South Africa yeilded $1.2 billion for the government of former president Nelson Mandela, and about $1 billion of that was ploughed back into the sector. With better exposure to global forces and the tenets of competition and choice, South Africa and the Southern Africa region lead the continent in phoneline penetration.South Africa is pushing the "African Connection" agenda , part of the African Renaissance plan adopted to do more business with themselves.
Most African governments have been considering liberalisation, regulation, universal service, private sector participation, introduction of wireless solutions amd the rapid pace of technological change for about a decade now, but the rest of the world is certainly not waiting for Africa.

Already, Europe is auctioning licences which seek to bring advanced third generation(3G) and fourth generation(4G) telephone technology into everyday life.Wireless application protocol (IP) telephony are currently the favourites in the developed economies. Much of Africa has yet to deploy the Global System for Mobiles (GSM) telephony system, a second generation technology.

Says Dr Tumininu Hawkins, a Nigerian UK- based telecommunications expert:" Africa is perceived as a basket case where war, hunger, volatility, insecurity, poverty, lack of credibility, millitary juntas and dictators flourish. But the world should not forget that Africa is, in reality, the world's fastest -growing patch and full of opportunities." She suggests that the continent accelerates its economic reconstruction and connection to the developed markets by adopting 3G technology like CMDA-2000, IMT-2000 (a set of standards) and UMTS (implementation of one of the accasses methods of IMT-2000, a bouquet of mobile technologies that allows highly personalised, broadband services). But why UMTS? Because it gives mobility( ie global roaming capability), content (data, sound and graphics capability), and most importantly because it is going to be deployed worldwide," Hawkins says. She notes that test UMTS networks will soon run in Japan and in the Nordic countries and other parts of Europe. The first commercial UTMS licence will be issued in 2002, prior to its global roll-out in 2005. "Africa needs to moniter this trends closely," she continues, " so that we can jump on the bandwagon when that train begins to move."

Experts note that the quest to grow Africa's telecoms sector rests not so much in the confusing array of technologies available, but in the way the market will be allowed to evolve.Foreign investors have made substantial inroads into the continent. They bring finance, technical know-how and exposure to global forces.America's SBC, Telkom Malaysia, Portuguese Telecom, France Telecom and UK's Vodafone are already in. Cocert (the British Telecom and AT&T; consortium), Nortel Networks and Hong Kong Telecom are seriously prospecting for stakes and potential local partners.

Cross-continental alliances, the recent merges of Vodafone and Mannesman, Vodafone and Airtouch, WorldCom and MCI, and the de-coupling of hitherto existing firms by European market regulators shows that Africa is equally prone to global market gimmicks.Brian Goulden of PricewaterhouseCoopers South Africa asks whether there will be regional mergers amongst African telcos- creating players able to deal with foreign competition from a position of strength.

Most foreign firms will have to work with local firms , as there is strong opposition among governments to 100% ownership of telecos. Between 1997 and 1998 almost 20 new mobile networks were launched in Africa. This points the way foward, showing that new investors are likely to come in offering wireless services that will interconnect with the old traditional fixed PSTNs. There is pent up demand for telephony in Africa. And there is no shortage of cellular, radio and satelite communication companies looking at Africa and licking their lips. As at June 1999, for instance, SafariCom, Kenya's mobile operator (40% owned by Vodafone Airtouch) had 9,000 subscribers but with a backlog of 47,000 customers. Subsequently,the Kenyan government awarded its second mobile network licence to France's Vivendi Telecom last November.Vivendi says it will roll out 60,000 lines by 2004.

Tremendous market opportunities exist for investors to vie for licences in various African markets many of which. like Nigeria, are still saddled with the ineffecient state-run telecos that provide expensive basic telecommunication services.
The Nigerian telecommunications scenario is interestingly sad. The country is surrounded by "smaller, poorer but less politically-complicated sisters" that have begun to take GSM phones for granted. In Nigeria, only the very wealthy use mobile phones. It costs the equivalent of $2000 to get one. And , with less than 1 million phones for about 118 million people, Nigeria is not only perhaps the most expensive and most docile in terms of regulation, it is actually the 39th least developed phone market in the world.

Alhaji Ghali Na'aba, the speaker of the Nigerian House of Representatives became visibly angry when, during a trip to neighbouring Niger, he saw shopkeepers, civil servants and commrcial sex workers brandishing cell-phones like car keys. Likewise in nearby Ghana and Cote d'Ivoire, the use of mobile phones is common among ordinary people.The Nigerian government continues to behave as if its pesky presence in the sector was not 'bad" enough. While South Africa will soon issue out a third GSM licence, the Nigerian government announced inApril 2000 that the country's first GSM licence would be operational in 18 months. Four GSM slots are on the market. Approval has been given by the government, according to Chief Ojo Madueke, Minister of Culture and Tourism, to the ministry of communications to spend N122 million to procure 6,000 anti-cloning handsets. M-Tel, the government-owned mobile operator , has been instructed to sell these sets at N25,000 (about $250). All this in an age where network operators are virtually giving away free handsets to contract workers. No thanks to the interconnectivity agreements between Nitel, the national telco, and the private telephone operators, services do not extend beyond home base states of the PTOs. In December 1999, more than 4 million handsets were reportedly given as gifts in Western Europe.

In an era when mobile phone are enabling data transmission, Africa's most populous patch ia still, as it were, in the woods. David Donkin, associate partner at Andersen Consulting South Africa, gives some advice:"The Nigerian telecos authority should borrow a leaf from their South African counterpart where plans are underway to licence a third GSM operator after the exponential growth witnessed in the country's telephony penetration when the previous operators commenced operations... ant GSM network that begins operations without WAP capabilities would have been outdated by today's standards with the trend towards m-commerce in which mobile phone users access the Internet and a host of other services beyond the basic voice."

The depth of market opportunity in Nigeria is aptly explained by the fact that despite the government's bungling of the bidding process leading up to the issuance of cellular licences , companies were still queueing up to pay the $100 million entry fee.

As at January 2000 about 6 million people in Africa had mobile phones. Or should this be about 6 million mobile phones had been sold and were in use? Most of these phones are not in Nigeria. A study by the World Bank concluded that cellular telephony is an aid to development and a major boost to a developed economy. International consultant BIS Macintosh also notes that for every 100,000 subscribers, 4,340 direct and indirect jobs are created. So as the mobile markets in Tanzania, South Africa, Ghana, Cameroon and several other sub-Saharan states continue to grow, Nigeria's "digital divide" also grows. A significant improvement in Nigeria's telecoms environment would have a major impact on the statistics and socio-economic reality if life in Africa.

Early this year ,Vodacom Tanzania was issued a GSM licenceby the Tanzanian Communications Commissions (TCC). The company is envisaging 100,000 subscibers by December 2001, as it plans to pump $90 million into the sector during its first year of operations. Tanzanian shareholders hold 49% while South African Vodacom Group own a controlling share of 51%. Econet Wireless became the first mobile operators in Zimbabwe to transmit the latest local, regional and international news using cell phones. Econet has roaming agreements with operators in 32 operators. In poor Burkina Faso, the sole incumbent cellular operator Onatel (Office National des Telecommunications) started a GSM network in 1996 and has signed up 2,730 subscibers by 1998, according to ITU. Now two more GSM 900 licences lasting ten years , have been approved.

One emerging feature of the continent's telecoms liberalisation is that licences are increasingly bundled with mandates for targets and network buildout in rural, or underprivilaged ares. South Africa's Telecommunications Act of 1996 prescribes that two-thirds of all new lines have to be in under-serviced areas. This has fomented subsidised community phone shops and prepaid services, where in South Africa, for instance, phone cards can be bought for R10, R20 or R50.

Meanwhile, Liberia, Africa's oldest republic is begging for investors. Still smarting from the quagmire of ethnic conflict, this West African country of 35 million people has seen its phone lines trickle down to just about 3,000. Without any real government for the best part of the decade the Liberia Telecommunications Company (LTC) has had no chance to upgrade its cable and copper wire exchanges, which were installed in 1962. A few banks in Monrovis, using cheaper satellite VSAT (very small aperture technology) technology, can afford to ignore this old war-ravaged circuit, but most of the country is in dire need of a new telephone system.

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