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Small Businesses in Africa - Rising Above Geography and Isolation

Written by  Samer Halawi
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Samer HalawiIssue:Africa and the Middle East I 2003
Article no.:5
Topic:Small Businesses in Africa - Rising Above Geography and Isolation
Author:Samer Halawi
Title:Regional Director, Middle East, Africa and Central Asia
Organisation:Inmarsat
PDF size:48KB

About author

Before joining Inmarsat as a regional director for Middle East, Africa and Central Asia, Halawi was sales director for FLAG Telecom’s Middle East and North Africa responsible for the sales of turnkey solutions and business development. Before this, he held the position of regional business development manager at ICO Global Communications, managing the business development and planning for the company in countries across the Middle East and North Africa. Halawi’s career spans both business and technical positions with organisations in the Middle East and North America. He holds a Master of Business Administration (MBA) from the University of Michigan and a Bachelor of Science in Electrical Engineering from Lawrence Technological University.

 

Article abstract

Connecting Africa is a tremendous challenge. There is little infrastructure for telecommunications outside the capitals and for only a few population centres in the richer countries. The geography is difficult and the economics of wiring the interior are not promising. Satellites offer Africa a way to provide fast, cost-effective links that are relatively easy to set up. For Small/Medium Enterprises, Regional Broadband Global Area Network provides instant, affordable connectivity even in cities where networks may be unreliable or bandwidth too low.

 

Full Article

Getting the many and diverse countries of Africa connected is, perhaps, one of the biggest challenges facing the global communications industry. Building the necessary infrastructure to roll out services is hampered by poverty, political instability, and rigid regulations and for fixed communication networks, some of the most hostile geography on the planet. Where it exists, most of the built infrastructure is limited to major cities in the richest countries leaving many millions of people in rural or remote areas and in the less well off countries with little or no voice let alone data connections. For most governments, though, the cost of not building networks is potentially much higher. The potential costs are high through lost opportunities in education, health, employment and commerce. Few countries with little or no communications infrastructure are able to attract either internal or foreign investment or international companies. This translates into fewer opportunities to raise local employment and/or living standards. Running viable and profitable national or local businesses, be they big or small, is severely hampered by unreliable, or non-existent Internet or broadband access – which in turn limits a company’s ability to compete in international markets. There are some moves to address the situation. Led by South Africa, Nigeria and Senegal the New Partnership for Africa’s Development (NEPAD) is a combined effort by African governments to stimulate the economic and social revival of the continent. Part of the initiative is to reduce costs and improve telecommunications with the stated aim of doubling teledensity to two per cent by 2005. According to statistics from the International Telecommunications Union (ITU), teledensity in much of Africa does not even reach one per cent, although in the more prosperous countries in the world it has reached 25 main lines per 100 people. The rate of growth of IP (Internet Protocol) connectivity in Africa between 1999-2001 was below that of the rest of the world. The most recently available statistics suggest that while it is home to one in eight of the world’s people, Africa has fewer than one in 50 of the world’s fixed-line subscribers one in 60 mobile subscribers one in 70 PCs and one in 80 Internet users. The number of mobile subscribers has, however, grown from 22,000 to 11 million in the last 10 years. In light of this evidence, the digital divide between Africa and the developed world, and in particular between the urban and rural areas of Africa, is increasing at a fast pace. This is hindering the socio-economic development of the continent. “The most recently available statistics suggest that while it is home to one in eight of the world’s people, Africa has fewer than one in 50 of the world’s fixed line subscribers one in 60 mobile subscribers one in 70 PCs and one in 80 Internet users. The number of mobile subscribers has, however, grown from 22,000 to 11 million in the last 10 years.” Providing even POTS (Plain Old Telephony Services), let alone essential Internet access, is difficult over terrestrial networks in regions where large numbers of people are dispersed over vast areas. Although submarine fibre cables have been laid around much of the coastline (south from West Africa past South Africa and north to Mozambique), they mostly provide broadband connections only to the capital and coastal cities. Satellites and Africa could be described as a marriage made in heaven. It is hardly surprising that with little fuss and less fanfare, suppliers are starting to do serious business in the continent. Since the wait for fixed connections may be in years, where they can, Africans are taking to the airwaves. Where regulators allow, and the cost versus need ratio is right, satellite networks are used for voice and/or data. Used both for backbone and for end-user connectivity, services over the big Geostationary Earth Orbit (GEO) satellites are fast and relatively easy to set up. Often, access to satellite communications requires no more than a terminal and a connection agreement. Immune to natural disasters (devastating floods in Mozambique totally destroyed the recently built fixed communications infrastructure), and providing ubiquitous cover, satellites are perhaps an ideal solution. "Satellites can be used to carry backbone traffic," suggests Claudia Sarrocco, consultant research analyst, ITU. "It is not easy to move Internet traffic between [African] countries – currently most of it has to be sent out of Africa to Europe or America and back again." Satellite prices are falling as capacity, speed and functionality rise. New satellite packet data networks allow users to pay by the volume, rather than by the minute, which makes this technology a more cost-effective, and often the only, viable solution. Satellite links are being installed in SMEs, in the rising number of Internet cafes, and in public buildings (often in rural areas), such as schools, hospitals and libraries. Previously regulators worried that revenues would be lost because some satellite networks bypass the fixed infrastructure owned and run by incumbent telcos. However, satellites are now being seen as a necessary technology to satisfy burgeoning demand for high-speed Internet access, voice communication, increased capacity and to meet Universal Service Obligations (USO). Many countries are deregulating their telecommunications sectors and where this has already happened, it has generally resulted in growth both in teledensity and the number of Internet users. After Uganda deregulated in 1997, the ITU estimates that the number of Internet users rose from less than 5,000 in 1996 to more than 40,000 in 2000 and, largely thanks to satellites, the available bandwidth grew from 84 Kbit/s in April 1998 to 12 Mbit/s down with a 4 Mbit/s return in early 2002. Buoyed by the aims of NEPAD and committed to improving connectivity and broadband access in a continent, global mobile satellite operators are selling mobile communication solutions through partners operating throughout Africa. A new high-speed packet data Regional Broadband Global Area Network (Regional BGAN) mobile service was launched at the end of 2002. Available in North and Central Africa, Regional BGAN provides access to a secure, shared channel link at speeds up to 144 kbit/s – users are charged only for data sent and received rather than for time spent on-line. A similar service but more suitable to video and voice traffic, the Global Area Network (GAN), has worldwide coverage and currently runs at 64kbit/s with a mobile ISDN or IP service. It was launched during 1999 and its use has grown significantly over the last four years. Regional BGAN is the precursor to a more ambitious project: two new satellites will be launched to provide a broadband global mobile packet data network capable of transmitting data at up to 432kbit/s. Since these systems are based on standard IP transmission, users can access the Internet and other networks via standard computer packages. All the usual business applications such as connections to corporate LANs and intranets, email, web browsing, file transfer and e-commerce are instantly available. As satellites bypass the local loop there are no bottlenecks and no wait for connections. For Small/Medium Enterprises (SMEs), Regional BGAN provides instant broadband connectivity at prices that are not prohibitive. Regional BGAN is being used as an extension of the corporate office even in cities where networks may be unreliable or bandwidth too low. "In all the capital cities, the Internet is available in varying degrees of reliability. A few cities have broadband connections," explains Sanjeev Jatania, director, Net Africa. "An Internet Service Provider (ISP), connected via a VSAT (Very Small Aperture Terminal), to a European or American hub, can serve several retail outlets or cyber cafes within an area of ten kilometres. "Yet VSAT is not a plug and play solution. It has fixed costs, requires engineers to install and maintain it and can be interrupted by lack of power. For companies needing to connect on a semi-permanent basis or communicate with remote locations it may be more cost-effective to move to a mobile satellite solution where there are no overheads and users do not pay for time on line. Although it is a niche product, Regional BGAN provides a one-stop-shop connection." “ For Small/Medium Enterprises (SMEs), Regional BGAN provides instant broadband connectivity at prices that are not prohibitive. Regional BGAN is being used as an extension of the corporate office even in cities where networks may be unreliable or bandwidth too low.” As a mobile IP network, Regional BGAN is a useful option for field staff needing to send information to and from a central office. It is being installed behind rural and remote automatic teller machines to send and receive data making it possible for people to access bank accounts. Institutions such as schools, libraries, Internet cafes and retail outlets are installing satellite connections both for their own and for public access to the Internet. Tourism companies are equipping their guides with mobile satellite terminals to connect to city offices, to game park lodges and to other groups travelling in the country. Mining and agricultural industries and others developing raw materials, use satellites to search global markets for accurate prices while media companies have always relied on the big birds to send and receive news and other stories. The advantages of GEO satellites to all users, be they governments or companies, lie in their reliability, ubiquitous coverage, their immunity to natural disasters and their available bandwidth. Given Africa’s geography and the proven links between economic development as well as reliable communications networks it would seem that satellites will continue to play a leading role in connecting its people, businesses and institutions to each other and to the global information society.

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