Internet and broadband markets: still virtually untappedWhile Internet uptake is growing strongly, market penetration is still very low due to the lack of reliable phone lines.
By early 2006, overall Internet penetration in Africa was around 4% (up from 2.6% a year earlier), with the highest penetration recorded in Réunion and the Seychelles (over 20%), followed by Mauritius (15%) and Morocco (12%).
This compares with over 50% penetration in developed countries.
Nevertheless, several African countries have experienced triple-digit growth rates in Internet usage in recent years, including Cote d’Ivoire, Morocco, Senegal, Sudan and Tanzania, and this trend is expected to continue in 2006.Various broadband initiatives have been launched and the number of countries offering commercial ADSL services reached 21 at the end of 2005 after tripling to 15 during 2004.
By early 2006, around 95% of all Internet subscribers in Morocco were already using ADSL services – an unusually high percentage for Africa.Egypt surpassed South Africa during 2004 in terms of the number of Internet users, thanks to a much more liberalised market.
Around 5 million are estimated to have accessed the Internet in Egypt in 2005, up from 2.7 million at the end of 2003, while in South Africa growth had been stagnant for years just above the three million mark, with growth returning to the market in 2005 following price reductions for ADSL services.
The next biggest African Internet markets are Morocco, and way behind Nigeria and Kenya.Limited accessWhile the total number of Internet users is difficult to measure, ISP subscriber accounts across the continent in early 2006 are estimated at between 5.5 and 6 million (up significantly from around 2 million a year earlier), most of which are based in Northern Africa and South Africa.
However, each computer with an Internet or e-mail connection in Africa on average supports 3 to 4 users.
Given the very low PC penetration rates, most users access Internet services through Internet cybercafes or kiosks, community telecentres, community phone-shops, schools and other types of public Internet access.
However, the ratio of users per Internet subscription has about halved during 2005, indicating improved affordability of personal Internet access.Although substantial numbers of cybercafes have been established in most countries over the last few years, the Internet has so far had the greatest impact at the top end of business and in well-educated, wealthy families, primarily in the major urban areas.Still, the high cost of accessing the Internet in Africa is a serious constraint on economic growth.
In more than half the countries in Africa, one year of Internet access costs more than the average annual income.
Only in Egypt, Libya and Mauritius is the annual cost less than 10% of the average income.
Lower prices result from deregulation, competition and foreign investments in the ICT sector, and in some cases government subsidies.The only African nations given the medium ICT ratings in the ITU’s Digital Access Index (DAI) report were South Africa, Namibia, Botswana, Libya, Tunisia, Egypt, Cape Verde, Algeria, Gabon and Morocco.
All other African countries fall within the low access category.There are at least 300 PoPs for Internet access across the continent, around a third of which are in South African cities and towns.
In addition, a growing number of countries now have local call charges for all calls to the Internet regardless of distance.Wireless access technologies and also the mobile networks in Africa are increasingly being used as a substitute for poor or non-existing fixed-line infrastructures.
Both GSM and CDMA digital systems are used for dial-up Internet access, but the achievable data rates are relatively low.
However, this has brought at least some level of connectivity to many areas that are unlikely to be serviced by the fixed networks, especially in rural areas along major arteries.
The growing number of GPRS- and EDGE-capable GSM networks, 1x-enabled CDMA networks and eventually the proliferation of Third Generation (3G) and WiMAX systems will enhance wireless-based Internet connectivity.Improving regional and international connectivityUntil recently, few African countries outside South Africa had international links larger than 64Kb/s, but at least 20 countries now have links carrying 10Mb/s or more, six countries have 100Mb/s or more, and three countries have more than 1Gb/s.
In 2002, Egypt (735Mb/s) overtook South Africa (564.5Mb/s) as the country with the most international bandwidth following the launch of government-backed international connectivity provider, Nile Online.By early 2006 there were 12 IXPs in Africa: Kenya, South Africa, Mozambique, Zimbabwe, Egypt, the DRC, Tanzania, Uganda, Swaziland, Rwanda and Nigeria (Ibadan and Lagos).
Other countries are holding preparatory discussions, with Angola and Mauritius the most likely to launch next.
An IXP interconnects ISPs in a region or country, allowing them to exchange domestic Internet traffic locally without having to send those messages across multiple international hops to reach their destination.
AfrISPA, the African ISP Association, is urging fellow African countries to create more national exchanges and then interconnected regional ones.ISPs become telcos, and vice versaThe liberalisation of VoIP, the accelerating rollout of ADSL broadband services and other IP-based infrastructure is enabling some of Africa’s larger ISPs to turn into converged service providers, while at the same time the traditional telcos are trying to boost their Internet businesses.In early 2006 there are up to 600 public ISPs across the region excluding South Africa, where the market has consolidated into a dozen major players with 90% market share and more than 200 small players with the balance.
Overall, Africa’s ISP market is very volatile, with large numbers of new entrants and almost as many failures due to the high cost of operating as an ISP.
A few international companies have successfully built regional networks across Africa, notably Africa Online, which has operations in eight countries.Countries with better developed infrastructures such as South Africa and the highly developed Northern African nations have more ISPs and they are also more widely distributed.
Public Telephone Operators (PTOs) have established Internet services in at least 33 countries and although these usually provided the only international link, many now face competition with private sector international links via VSAT.By early 2006, at least 16 countries had 10 or more active ISPs, while three had more than 100 (Egypt, Nigeria and South Africa).
Only a handful of countries still had only one ISP, including Central African Republic, Chad, Congo, Djibouti, Ethiopia and Niger.The convergence between telecoms and the Internet became apparent when Morocco’s second largest ISP was awarded the country’s third fixed-line licence in September 2005 which also includes a limited mobility concession.
In Kenya, following the liberalisation of VoIP, data carrier Kenya Data Networks (KDN) is rapidly developing into an alternative telco rolling out extensive fibre infrastructure and offering converged services, and in South Africa ISPs offering VoIP under the new deregulated environment are getting ahead of the SNO which has yet to launch services.Wireless data systems are set to boom in Africa as ISPs seek more effective ways of delivering services than fixed-line networks.
Increasingly ISPs are turning to terrestrial wireless technologies, which offer higher bandwidth and lower running costs.
The emergence of WiMAX technology is expected to deliver a further boost to this sector.African mobile networks are also playing an increasing role in delivering the Internet as 3G and 2.5G mobile technologies such as GPRS and EDGE are deployed and become fully operational, providing higher data rates than conventional dial-up.
In many cases mobile operators geographically cover more of an African country with their networks than fixed-line operators.
They also have large existing customer bases and the infrastructure to cater for the prepayment of ISP services.Convergence of telecoms and mediaThe liberalisation of broadcasting regulations and the increasing penetration of low cost Direct-to-Home (DTH) technology have led to significant growth in Africa’s television market.
While the vast geography of Africa and the sparse communications infrastructure make a perfect combination for satellite-delivered telephony, there is also an emerging market for audio and video broadcasting services.
The broadcast potential is attracting commercial ventures with expertise in DTH and other satellite broadcast technologies.
In Africa, where the overall cable penetration rate is extremely low, DTH service provides an efficient means of delivering TV broadcasts to the expanding middle class.
Huge growth is expected in this market in the coming years particularly in South Africa where the MIH Group (now part of Naspers) dominates the market.Pay TV is becoming increasingly more attractive to those Africans who can afford TV sets.
Multichoice is still Africa’s premier pay TV service, with more than 1.2 million subscribers across 50 countries in Africa, but in January 2006 the regulator in Botswana, BTA, received an application for a new satellite pay TV service with initially 10 channels, planned to eventually cover most of Africa.
A decision is expect to be made during 2006.Africa’s first digital terrestrial television (DTT) broadcast system was launched in Namibia in February 2005, and another service will be launched in Mauritius in 2006.Interactive TV, especially the variety using mobile phone text messages (SMS), has found its way to Africa and is growing fast.
The Personal Video Recorder (PVR) was introduced in South Africa in 2005 and will become available in other African countries in 2006.With far greater ownership of TV sets compared to PCs in Africa, the broadcasters’ viewers represent a huge potential customer base for Internet services as well.
At least four African countries are currently trialing or planning to introduce Broadband TV and Video-on-Demand services, typically converged with voice and data services under so-called Triple-Play models.Originally set up as signal distributors for South Africa’s broadcasting industry, Orbicom and Sentech own infrastructure suitable for IP-based NGN and are increasingly playing a role in the country’s converging telecommunications markets.