Despite double-digit growth over the last four years, Africa accounts for only 7% of of the world’s Internet users and less than 0.5% of the world’s fixed-broadband subscriptions. The key to bettering those numbers? Innovation and collaboration.
Trefor.net is pleased to present the following “Broadband Week” post from Michele McCann, Business Development Manager for Teraco Data Environments. Michele’s post is her first contribution to the site.
For anyone who has not had the opportunity to see Africa outside of the context of a safari with lions, elephants, rhinos and the ubiquitous donkey, here is a quick snapshot view of second largest continent in the world.
Geographically, Africa makes up one-third of the world’s total landmass, with a total population of a little more than 1 billion. The population figures are really only an estimate, as the majority of our people have generally not been counted due to lack of process and technology. This rough estimate equates to 15.6% of the world’s population, but only 7% of the world’s Internet users. Our internet penetration is a mere 16.3% and rising, with content players such as Facebook enjoying contributions from over 51 million African subscribers at a 4.8% penetration rate. We are the 2nd largest mobile market globally, with over 650 million mobile subscribers and 700 million SIM cards currently in use.
The 2014 landed cable capacity is now >30Tbps and is expected to double by 2015. This capacity growth has happened in a mere five years, from its previous humble capacity of just over 300Gbps. Multiple landing stations are available throughout the continent, with South Africa alone having over 10 landing stations directly connecting to four different continents. This has resulted in improved latencies from >800ms to just under 200ms.
The terrestrial fibre inventory of Africa is estimated at over 732,662km, reaching 40% of the population, of which 313m people are within a 25km reach of a fibre node.
Considering Africa’s explosive and constant growth, why are we still experiencing average fixed broadband speeds of 5.6Mbps at a rate of $20 for a 5GB package, excluding the line rental which is over $100 per month? And mobile broadband speeds averaging at 6.9Mbps at a rate of $80 for 5GB?
Recently released ITU statistics indicate that by the end of 2014, fixed-broadband penetration will have reached almost 10% globally. 44% of all fixed-broadband subscriptions are in Asia Pacific, and 25% in Europe. In contrast, Africa accounts for less than 0.5% of the world’s fixed-broadband subscriptions, and despite double-digit growth over the last four years, Africa broadband penetration remains very low.
Globally, mobile-broadband penetration is expected to reach 32% by end 2014; in developed countries, mobile-broadband penetration will exceed 84%, a level four times as high as in developing countries (21%). The number of mobile-broadband subscriptions will reach 2.3 billion globally and 55% of all mobile-broadband subscriptions are expected to be in the developing world. Mobile-broadband penetration levels are at their highest in Europe (64%) and the Americas (59%), followed by CIS (49%), the Arab States (25%), Asia-Pacific (23%) and Africa (19%).
So why is Africa still lagging? Is it a lack of infrastructure? A lack of Internet eXchange Points (IXPs)? A lack of access to content? A lack of innovation?
The answer to all of these questions is “No.”, except perhaps for the last one citing a lack of innovation. As you have seen, Africa has loads of infrastructure, which can reach millions of people. The top 5 largest content players have invested in Africa and are connected to the key hubs – e.g., South Africa, Kenya, Nigeria, Egypt – all of which have functioning exchange points located in neutral facilities. Therefore, as content, infrastructure and distribution points are easily available then the only conclusion is a lack of innovation around how to generate revenues in a changing world rather than hanging onto old business models of high transit and interconnection costs.
Is this something that will change in the near future? In my opinion, the operators should change or sell out! As users become more and more tech savvy, pricing models and service levels are being questioned. And with more and more global operators and content providers looking to Africa as their new market expansion opportunity, existing African providers are going to need to adapt business models and provide services that are relevant to their market place. Great examples of African innovation stories include Orange providing free access to Facebook for all their African users, Bharti Airtel providing one mobile rate across Africa, and – in what is perhaps the biggest game changer – the launch of mobile money markets through M-Pesa by Safricom (which allows users with a national ID card or passport to deposit, withdraw, and transfer money easily with a mobile device). All of these innovations are focused on services that users can obtain using broadband as the vehicle.
For the necessary innovation to occur and aid in solving Africa’s broadband Internet problems, cable operators, infrastructure providers and ISP’s all need to collaborate across services and pricing, and they need to start keeping the end user in mind across all business models.