I’ve just returned from a conference in Nairobi and I wanted to write about some of the interesting and insightful topics that were discussed.

The east African telecoms landscape is dominated by mobile networks. Because mobile penetration rates vary vastly across east Africa, even between neighbouring countries, it is an interesting region to watch for innovation, expansion and market development in our industry. Kenya remains the largest mobile market in the region with about 28 million subscriptions in Q1 2012 (Informa Telecoms and Media).  The other market to watch is Ethiopia which although still largely unconnected in many parts, has grown tremendously in recent years (but it is still the 2nd lowest penetrated). Nearly half of the unconnected in East Africa resides here. Taking those two countries as examples it is evident that the motivation of a Mobile Network Operator (MNO) is very different in an unconnected country by comparison to a largely penetrated market. For example – in Kenya where voice products are largely saturated, alternative revenue routes and customer retention strategies are being explored. As a result we see an explosion of consumer Value Added Service (VAS) offerings. MNOs are looking for innovative ways to build deeper relationships with their subscribers and to improve the experience the subscriber has using their services. Data products which are largely untapped in the rest of east Africa are also on the up as more and more content is being created and consumed by their tech savvy customers. Customer experience management and improvements to QOS (quality of service) also featured as a key focus in a market where retention is now as much a motivation as acquisition.

In my last blog I focused on giving an overview of African connectivity - where we have been and how far we have come since the ‘African internet’ first began. The main objective of the industry panel, recently hosted by Gateway Communications, was to discuss what the future of African connectivity would look like in years to come.

Panellists provided unique outlooks for the future of connectivity on the African continent:

• Storage capacity will double every 12 months or so, meaning that soon we will be able to get a snapshot of the entire Internet on a single device.

• Within the next two years we will see major global players opening platforms in Africa, promoting local content and reducing prices. The next ‘Google’ or next ‘Skype’ could very well come from Africa.

• The construction of a ‘Telehouse’ in Africa, interconnecting cable and satellite operators may be the answer needed to allow intra-Africa traffic to be switched and peered within the African continent.

It was a privilege bringing together some of Africa’s top telecoms leaders for our high-level industry panel held last week in Johannesburg. As more capacity becomes available to Africa in 2012, we wanted to hear the views of a variety of industry stakeholders and discuss how each of them is working to ‘connect Africa’.

On the panel we had Ibrahima Guimba Saidou, African VP and GM at SES; Chris Wood, CEO of WIOCC and the Chairman of the EASSy Management Committee; technology entrepreneur, founder and former MD of Google SA, Stafford Masie; Nzioka Waita, Head of Corporate Affairs at Safaricom; and Andile Ngcaba, Chairman of Convergence Partners (shareholders in SEACOM, New Dawn, and FibreCo) and Executive Chairman of Dimension Data MEA. The discussion was facilitated by Russell Southwood (editor of Balancing Act).

Looking back at how far we have come, it is clear that we are currently in the middle of a ‘connectivity revolution’. In November last year, the African Internet turned 20. During these two short decades, connectivity in Africa has exploded. In fact, between 2001 and 2008 alone, African Internet penetration increased by 1000% and it’s interesting to note that seven years ago 75% of the Internet was in English whereas today it is less than 25% - and falling. We should also not forget how the rise of social media has had immense political and socio-economic impact on how Africans communicate with each other and the rest of the world.

Africa is more connected to the rest of the world than ever before, following years of unprecedented change in the telecoms landscape. We have seen ICT infrastructure deployment prioritised by governments and private sector alike with a common recognition of the role connectivity plays in both country and continental ability to compete intra and ex-Africa. There has also been much excitement generated by the landing of the new fibre-optic cables on Africa’s coasts bringing more affordable and faster international connectivity to the continent. It is estimated that future sub-sea capacity will rise to a maximum of 21,400 Gbps in 2012 after WACS (West Africa Cable System) and ACE (Africa Coast to Europe) are activated.

Demand for connectivity

With all these new developments in the telecoms sector, there is no doubt that the thirst for connectivity is set to increase with a number of drivers fuelling the demand for capacity. A primary factor is the decrease of bandwidth and data costs - increasing competition in Africa’s broadband market, sparked by the landing of undersea cables, has started forcing down telecommunication prices on the continent allowing more and more citizens to have access to the Internet and mobile communication. There has also been a rise in demand for content, be it social networking sites, YouTube videos or question and answer platforms like Google’s Baraza. As African consumers get increased access to Facebook, Twitter etc. they want more but at a lower price and a faster speed.

The result of easier and cheaper access to mobile data and the increase in the number of mobile subscribers on the continent (now at 500 million up from 246 million in 2008 according to Mobile Monday) is that mobile phones are now being used for social networking, mobile banking services (such as MPESA) and even shopping.

Last week Mike touched on the topic of recent influx of cable capacity for Africa, and the challenges this presents. One challenge he mentioned is the downward pricing pressure; it’s clear from attending the Carrier’s World conference in London this week that all wholesale operators are feeling the same pressures.

African wholesale capacity prices have dropped because of recent submarine cable builds, and this is no bad thing for consumers!  An International Telecommunication Union (ITU) report, ‘Measuring the Information Society 2011’, highlighted that telecommunication and Internet services globally have become more affordable with some retail prices dropping by over 50%.

Most Africans still don’t have access to high speed broadband, but this is set to change. The ITU report notes that the average cost of fixed broadband was 290% of monthly income at the end 2010, a drastic fall from the from 650% recorded in 2008.

Equally as important to the changing landscape of African telecoms is the increase in the demands of the consumer through smartphones and handset refresh.  Previous barriers to service in Africa are falling because of more connectivity possibilities. Prices have decreased, access has increased, so connectivity is now possible for more and more Africans, and no longer a luxury for which you have to pay exorbitant prices. In an increasingly commoditised and price sensitive market, how can wholesale carriers differentiate their services?

I’ve just come back from Nairobi where I was involved in a very thought provoking panel discussion at the Capacity Africa conference.  It’s clear that the impact and influx of additional sub-sea capacity into African coastal markets has been dramatic, fundamentally changing the telecoms landscape in Africa.

Naturally, prices have decreased as a result of submarine cable build-out, such as the recent landing of the West African Cable System (WACS) in South Africa and Namibia, but perhaps more importantly, there has been a fantastic increase and improvement in the wholesale service offering available to mobile network operators (MNOs). So the big change has been in the raised demand set and higher expectations from our customers – they demand the best quality and expect to pay a fair price for it.

As a result of cable construction, the growth in demand for international connectivity from African operators has been strong, with bandwidth usage increasing exponentially throughout 2009 and 2010.

In July and August this year we approached over 1,000 of our key customer contacts from more than 100 different African MNO's and ISPs. I’d like to thank everyone who took time from their busy schedules to respond.  We very much appreciate your views and comments that have helped us to continue to improve the services we provide to all of our customers.

Congratulations also to our winner of the iPad2, Mr Mahomed Mussá from mCel in Mozambique. Our local Gateway representative will shortly be in touch with you to arrange delivery.

This is an on-going process of improvement and so we will be running our next customer survey early in 2012. I hope we can look forward to hearing more of your views and insights as to how Gateway Communications can better serve you, the customer.

It is no surprise to those of us in the industry that by mid-2010, mobile subscribers constituted around 90% of all African telephone users.  A recent Mobile Africa Report from Mobile Monday estimates that there are now more than 500 million mobile phone subscribers in Africa, up from 246 million in 2008.

Increasing competition in Africa’s broadband market, sparked by the landing of undersea cables, has also started forcing down telecommunication prices in the region, with mobile phone service providers announcing significant reductions in Internet service prices.

The result of this is that mobile phones are being used for more than just traditional means. Increasingly, mobile banking services (such as MPESA), social networking and even mobile shopping services are becoming commonplace.  There are clear signals that mobile proliferation and usage on the continent is set to sky-rocket.

With an Internet penetration of around 4.6% and a mobile penetration of approximately 16% (ITU, 2010), Malawi boasts an economic growth of 6-7% a year and continues to expand. However, a number of issues have prevented an increase in capacity, including the fact that the country is landlocked with limited telecoms infrastructure, high service costs and an estimated 80% of the population living in rural areas.

Increased connectivity will have a profound effect on the Malawi’s main economic sectors, especially agriculture. Mobile and internet communication can allow small-scale farmers to stay in contact with each other and obtain information outside of their communities.

For us, ‘connecting Africa’ means linking up African carriers to each other and to the rest of the world. Whilst we continue to hear about the growth of data traffic in Africa, the continent continues to see one of the fastest growth rates in outbound international voice traffic of any region worldwide. Vodacom South Africa’s recent results demonstrated that whilst data exhibited the largest increase year-on-year, mobile voice traffic and interconnection fees were responsible for the lion’s share of the company’s revenues.

Today there are 30 million African citizens living abroad, whose remittances account for billions of dollars into sub-Saharan Africa every year and who continue to keep in regular contact with their friends and family in Africa. Mobile technology is increasingly acting as a ‘glue’ for African migrants, promoting tangible links between the Diaspora and their countries of origin.