Welcome to the 6th annual review of telecommunications infrastructure development in Africa. This review combines my analysis of the last 12 months as well as links to over 270 articles covering a range of African telecom infrastructure development issues in 2019.
On the surface it would appear to be just another great year for African undersea fibre optic cable capacity. Both WACS and SEA-ME-WE5 completed capacity upgrades. MainOne expanded into Côte d’Ivoire and soon Senegal. The DARE and METISS cables seem on track for lighting up in 2020, bringing even more capacity to the east coast of Africa. METISS should have a significant impact on Mauritius, Madagascar, and Reunion offering both redundancy and competition to existing services. Similarly the DARE cable will bring additional capacity to the horn of Africa.
But the biggest African undersea cable news of the year came from Silicon Valley. Both Google and Facebook were in the news for founding undersea cables that would serve African countries. Google at least had the courtesy to post a news article on their site confirming their intention. For Facebook, we are left with rumour and speculation. Both companies seem a little tone-deaf on the naming of their cables. Google exhibits a degree of hubris in naming their cable after, Olaudah Equiano, a West African writer and abolitionist from the 1700s. Given what is known about the cable, it might be more appropriately named the Cecil Rhodes cable. Among other things, Cecil Rhodes is famous for his dream of a railroad running from Cape Town to Cairo; a railroad designed to facilitate the extraction of resources from the continent. For Facebook, naming their cable Simba, from Disney blockbuster The Lion King, also strikes an off key. Simba is a Swahili word meaning lion but the word has been appropriated globally by the Disney franchise.
The cable names are trivial compared with their potential impact. These are the first African undersea cables to be led by Google and Facebook as opposed to a consortium of telecommunications companies like WACS, EASSy, and others. This is part of a global shift in undersea cable investment where the resources to invest are increasingly coming from Google, Facebook, Microsoft and other digital giants. These companies have billions of dollars at their disposal in comparison with telecommunications operators that are often struggling to cope with high taxation, spectrum fee windfalls, and other regulatory compliance issues. I seldom have much sympathy with the likes of Vodafone, MTN, Orange et al but they are hopelessly outmatched when it comes to resources for undersea cables.
This shift in the balance of power in terms of investment resources is compounded by the fact that these new cables also represent a new generation of fibre optic technology with the result that these cables may have capacity that is more than ten times greater than any existing cable. Add to this the knowledge that the greater part of all undersea cable traffic are bits flowing to refresh the far flung data caches of Google, Facebook, Microsoft et al and what we see is nothing less than a tectonic shift in the very architecture of the internet. There is much more to be said about this that goes beyond the scope of this review. For a big picture view, I recommend Geoff Huston’s talk on the The Death of Transit.
The most important take-away for African governments is to recognise that Equiano and Simba represent an opportunity to negotiate a better internet deal for their countries, in terms of both neutrality and capacity. There are enough Google and Facebook users in Africa to insist on a better deal. The railroad needs to run in both directions.
Terrestrial Backbone Fibre
African terrestrial fibre networks continued to expand in 2019. According to Paul Hamilton of Africa Bandwidth Maps, there are now more than a million kilometres of fibre optic networks across the continent.
The most noticeable change in 2019 was an increase in cross-border fibre connectivity. Building on their announcement last year of a network spanning from Cape Town to Cairo, Liquid Telecom announced in November that they had successfully established the first east-west continental network connection linking DRC with the rest of their network. In West Africa, Orange announced plans for a West African terrestrial fibre network linking Senegal, Mali, Burkina Faso, Côte D’Ivoire and Ghana. In Namibia, Paratus was also spreading its wings with the Trans Kalahari network extending connectivity to Zambia. On the east coast, Tanzania’s state-owned operator, TTCL, announced plans to extend connectivity to Burundi.
All of this is great news for land-locked countries offering more connectivity options and better network redundancy. Hopefully, this will also lead to lower prices for network capacity. MainOne’s CEO, Funke Opeke is not the only one to lament the fact that terrestrial fibre networks remain under-utilised due to high prices and a failure to establish an enabling environment.
FTTH and OTT
Fibre To The Home (FTTH) continues to grow across the continent although news of their roll-out doesn’t seem to be making as many headlines as last year. Perhaps the spread of FTTH in urban areas has become so commonplace as to no longer be as newsworthy as it was a few years ago. Safe to say that every major operator on the continent is rolling out FTTH services at one level or another. And why wouldn’t they? Fibre’s capacity is comparatively infinite, especially as compared with most wireless services, making its lifespan much longer than wireless technologies. It also doesn’t have the massive rents now associated with radio spectrum for mobile services that can cost an operator anywhere from ten to a hundred million dollars just to begin building an LTE network. Granted it comes with other challenges like rights of way but for urban areas it can often seem like a safer bet for investors.
A possible downside to FTTH is that it may be inadvertently accelerating the digital divide as these high-capacity networks are only being built in densely populated urban areas where the return on investment will be maximised. Of course this is also true of mobile networks but it does point to the fact that fibre investment needs to be considered in the context of universal service strategies.
With the arrival of FTTH networks (and higher capacity LTE networks), streaming media service like Netflix et al that require substantial network capacity have really come into their own.
Sidebar: This year I have run into a bit of a nomenclature problem with the term OTT. I have always treated it refer specifically to streaming services that are increasingly an alternative to traditional broadcast services. This is more or less in line with Wikipedia’s collection of definitions for OTT. However, as taxes on social media emerged as an issue in 2019, governments and journalists seem to have rolled social media into the definition of OTT. And indeed the line does become blurry when services like YouTube are considered.
Around the world, streaming content is challenging traditional broadcast networks and African countries are no exception. South Africa alone is expected to generate USD21M for Netflix in 2019. But that is only half of the story. Netflix is also investing significantly in the development of African content in South Africa, Nigeria, and Senegal. As global competition to Netflix grows from Amazon and others, it seems like this is only likely to be good news for African television and movie developers who may find new sources of investment. My favourite streaming media news story of the year is this one about Nigerian teens who are making amazing sci-fi short movies with smartphones and open source tools like Blender.
In the world of social media, things are not so rosy. As evidence mounts around the world of the role that social media services like Facebook, WhatsApp, YouTube and others are playing in the promotion hate speech, radicalisation, and the spread of “fake news”, governments across the continent have become legitimately concerned about the role that social media is playing in the life of their countries and the extent to which they operate without oversight or consequence. They also see the tremendous wealth accumulated by these companies and debate whether some of it should be finding its way to them in the form of taxation for services delivered in their countries.
Unfortunately early attempts to tackle these issues have destroyed more value than they have created for governments. Uganda is the poster child for user tax on social media having implemented one in mid-2018. Virtually every analysis of the impact of this policy point to Uganda’s policy driving users offline in droves, reducing overall revenues generated from taxation of the sector. Unfortunately, Benin, Tanzania, Zambia, and others have followed suit with variations on this theme. Sadly, those who suffer most from a user tax on social media are the poor whose voices are least heard at the best of times.
This year saw more spectrum deals resulting from acquisitions or trades rather than outright auctions of spectrum.
In Ghana, there was ongoing fall-out from the 2015 800MHz spectrum auction which saw MTN as the only successful bidder paying $64M dollars for 20MHz of spectrum. MTN’s insistence that any future bidders for that band match what they paid meant that no one got any additional 800MHz spectrum until 2018 when Vodafone agreed to pay $30M for 10MHz of spectrum. But it turns out that 10MHz is not enough for Vodafone to serve its customers and so the debate regarding the remaining 800MHz spectrum is set to continue into 2020.
In Nigeria, Airtel has acquired 10MHz of 900MHz spectrum from InterCellular to aid their LTE rollout. That spectrum is priced at USD70M plus administrative fees. The deal is still subject to approval by the regulator. USD70M is the price set under the regulator’s spectrum trading guidelines. It is not mentioned whether the trade extends the period of the license or whether it will expire when InterCellular’s license is due to expire. According to the trading guidelines, revenue from the acquisition is split 40/60 with the regulator. Meanwhile, after a protracted debate with the regulator, MTN Nigeria succeeded in gaining access to the 800MHz spectrum resulting from their acquisition of Visafone in 2015.
Almost inconceivably, South Africa has still not assigned any new mobile spectrum since their first attempt to do so in 2010. There has been some progress with a policy direction being announced by the minister and options for moving forward being published by the regulator but it is unclear what options are a likely to be selected. The proposed wholesale wireless network (WOAN) remains a wildcard in the whole process.
In Kenya, Jamii’s 700MHz trial license was ‘upgraded’ to a full license by the regulator, which appears to be something of a formality as they had already paid the first installment of their full license fees.
LTE services continue to expand on the continent (with or without new spectrum) with too many announcements to list.
Unlicensed and Dynamic Spectrum
WiFi went through a year of expansions and contractions in 2019. Facebook (ExpressWiFi) and Google (Station) both expanded their their respective WiFi initiatives into South Africa, with ExpressWiFi also launching in Ghana. Meanwhile, South Africa’s largest WiFi company, VAST Networks, became insolvent. Surf Networks in Kenya also found itself in financial trouble and was snapped up by BRCK. BRCK itself also expanded into South Africa with its offering of advertising-paid WiFi on buses/taxis. Meanwhile there were various announcement of “free WiFi” from national governments, municipalities, and operators across the continent.
The lesson I take away from the above is that commercial WiFi initiatives rush to scale at their peril. The barrier to uptake of WiFi is higher than mobile broadband. Commercial WiFi operators can be caught between the Scylla and Charybdis of decreasing LTE costs and free WiFi offerings from governments. This doesn’t mean that there aren’t successful businesses to be built on WiFi but it does mean that success is likely to be very contextual, with WiFi operators taking advantage of specific environments and market conditions. If that is true then the growth of WiFi is likely to be more organic than meteoric. The market needs investors that understand this. As a technology, WiFi has scaled through a millions of small implementations and, as such, has created a market worth billions of dollars. Small and medium size operators, whether commercial or community cooperatives are quietly succeeding without much fanfare.
In the world of dynamic spectrum, TVWS continues to make incremental progress with regulators. South Africa, having approved TVWS use in 2018, still awaits the establishment of a publicly-available geo-location database service provider that can dynamically assign spectrum to TVWS devices. In spite of that, the regulator has approved some commercial projects to move forward with TVWS. In Mozambique, the regulator announced a regulatory norm in August 2019 which allows the commercial use of the TVWS spectrum.
Thus, a year of modest but still significant progress in TVWS regulation across the continent. The fact that South Africa and Mozambique have formal TVWS regulation is bound to embolden and encourage other countries to move forward. There are rumours that Nigeria is very close to enacting TVWS regulation.
Sidebar: An on ongoing stumbling block for TVWS regulation in many countries, is the need for a geo-location database. While this may be necessary and even inevitable in the fullness of time, it may well be overkill in terms of getting started with TVWS regulation. In most African countries, there is enough spectrum available in 470-694MHz that operators could be allowed to proceed in underserved areas without any significant danger of interference that could not be successfully dealt with using an excel spreadsheet.
The biggest genuine news on satellite services in Africa in 2019 was the launch of new High Throughput (HTS) satellites including Hylas-3 (covering West Africa), Intelsat 39 (focus on DRC), and Amos 17 (West and Southern Africa). These new generation satellites should offer practical alternatives for rural broadband backhaul on the continent. By practical I mean broadband capacity at prices that are comparable with other access technologies. However, as of year end 2019, there isn’t much public market information available on prices yet.
Dwarfing the news of these launches has been the news of initial launches of Low Earth Orbit (LEO) satellite constellations that promise low-latency, high-speed broadband virtually anywhere in the world. The most notable in 2019 was Spacex’s Starlink initiative which launched two sets of 60 satellites in the course of the year. These are the first of many launches for a network that is planned comprise more than 4000 satellites. If successful, Starlink could potentially out-perform fibre optic links for some connectivity. Spacex is not alone in this endeavour. Other LEO broadband satellite constellations include OneWeb, which also launched six satellites in 2019 and claim to have signed up their first wholesale customers. Other contenders include Amazon’s Project Kuiper which has just established a large manufacturing facility in Seattle and is busy hiring. Last but not least is satellite veteran Telesat. This is a high-stakes game with billions of dollars at stake for each player. There has already been one casualty with LeoSat folding in November after investors pulled out.
Will the LEO broadband constellations actually work as advertised? Bill Gates famously took a bath on that prediction twenty years ago. Much has changed since then though. One of the key factors will be whether phased-array antennas can be manufactured cheaply enough to make them a realistic consumer option. If only one of these networks succeeds, it could mean a significant change for internet infrastructure globally.
LEO constellations are not without controversy though. Astronomers have complained that Starlink may ruin observation of nearby galaxies. The rush to launch these constellations has a bit of the flavour of the scramble for Africa in the attempt to exploit a lack of awareness and regulation in order to colonise a region with technology without thought for long-term consequences.
Again this year, I leave you with with a grab bag of issues that didn’t fall neatly into the above categories.
In July of 2018 there was fanfare about Alphabet Loon’s tie-up with Telkom Kenya to deliver rural broadband via balloon. Fast forward to the end of 2019 and Loon service in Kenya has yet to materialise. Elsewhere Loon has just have received permission from the Civil Aviation Authority in Uganda to operate. More to come we hope.
Mergers and consolidations were also a part of 2019. A merger of Telkom Kenya and Airtel has been hotly debated in the country. In Uganda, a potential acquisition of Eaton Towers by ATC threatens to create a tower monopoly. Smart Telecom in Tanzania closed its doors. Zimbawe’s Telecel may be in trouble, as may South Africa’s Cell C. It does make you wonder whether any country can sustain more than two or three mobile network operators. As I argued last year, technological diversity is a factor in promoting competition. Not to mention equitable and affordable access to both backhaul and spectrum, which may ultimately be the two most important indicators of a competitive market.
Noticeable by its absence this year has been much discussion of zero-rating on the continent. Facebook has been expanding their Free Basics without much notice. A notable exception has been South Africa where the Competition Commission has proposed both zero-rating of essential web resources, and a daily basic allowance of broadband for all citizens.
Stop press: Cheating a bit as this is technically 2020 news but a happy report from Nigeria. On January 2nd, the regulator published draft guidelines on use of Television White Spaces spectrum.
16 Jan 2020: The first publication of this review incorrectly stated that Microsoft was the successful bidder for 800MHz spectrum in Ghana. It now correct says MTN.