Jason Lobel is NDS Limited’s Regional Sales Director for Africa; he has extensive experience with conditional access, middle-ware and DVR solutions. Jason Lobel previously worked for Ericsson in various sales and business development positions, and has worked with many of Africa’s major networks including MTN, Vodacom, Celtel/Zain, Telkom and Econet. Mr Lobel spent his early career working as management consultant for Andersen as well as KPMG where he specialized in market development and corporate strategy. Lobel has assisted various multi-national blue-chip companies in both the telecoms and non-telecoms space. These include FirstRand, Sasol, Cinergy Corp, Kumba Resources (now part of Anglo Amercian) KWV Distell and Sanlam. Jason Lobel holds a BCOM Hons, Economics from Rhodes University.
In the last decade, more than 300 million Africans made their first phone call or surfed the Internet for the first time. Telecom backbones, especially under-sea fibre-optic cable systems, are starting to link Africa to Africa and to the world. Internet connectivity lags due to the price of PCs and limited broadband connectivity. Set-top boxes that convert analogue TVs to receive digital television, though, are inexpensive and can - especially with government subsidies - provide Africa’s people with cost-effective Internet access.
For more than a decade, convergence has been featured in just about every broadcasting, telecommunications and high tech conference. In the developed world, convergence is already underway, but what about developing regions such as Africa? When most non-Africans think of Africa, they normally associate the continent with poverty, underdeveloped economies and dilapidated infrastructures. Over 80 per cent of the world’s Highly Indebted Poor Countries (HIPCs) are located in Africa and the majority of Africans do not have access to the Internet, let alone a broadband connection. Africa’s telecom boom The reality is that Africa has the most abundant mineral resources in the world. Over the past decade, many African governments have liberalised both their political and economic policies. As a result, Africa’s abundant mineral wealth has started to pay dividends that are now trickling back to its citizens in the form of proceeds of Foreign Direct Investment (FDI). FDI in Africa has increased fivefold over the past 12 years. A significant part of these capital injections has been for telecommunications infrastructure, so, as a result, more than 300 million Africans made their first phone call or surfed the Internet for the first time during this period. This demand for telecommunications has led many of the world’s largest telecommunications providers, such as Vodafone, Bharti, MTN, Tata and France Telecom, to make extensive investments and acquisitions across the continent. Initially, the main focus was on the rapid deployment of mobile networks, but more recently the investment focus has started to shift from ‘last mile’ connectivity towards backbone services. The most significant investment today is in under-sea fibre-optic cable systems that will link Africa to the rest of the world. Over the next three years, no fewer than six undersea cable systems will be laid along the coast of the continent. The first of these new systems to go live was Seacom in July 2009, with a capacity of nearly 1.3 terabits per second. The benefits were almost immediate, leading to a significant decrease in wholesale backbone prices. This in turn has sparked a price war in both the wholesale and retail Internet access markets that will mean more affordable services for end users. Mass-market connectivity One of the biggest barriers to mass-market Internet adoption has been the price of PCs. While PC prices have fallen dramatically over the past ten years, basic entry level PCs and net books still cost $400-$800 - the equivalent of six months’ salary for four out of five people living in Sub-Saharan Africa, who survive on less than US$2.50 per person per day. By contrast, the price of a digital set-top box (STB) has continued to decline to a level that is now affordable for a significant number of African households, making it, rather than the PC, the catalyst for a converged future. For example, the price of an MPEG-4 DTT STB today is around US$50 and prices continue to fall. The STB Almost all countries across the world have initiated programmes to migrate their broadcasting services from analogue to digital. While many European, Asian and Northern American countries have been planning their digital migration for the past decade, African governments have only now begun in earnest to plan their switchover to digital broadcasting. The International Telecoms Union (ITU) has set a deadline of July 2015. With the deadline fast approaching, a number of African policy makers have been spurred into action. Africa can, of course, learn from the lessons of DTT (Digital Terrestrial Television) implementations elsewhere and avoid the MPEG-2 legacy issue faced by Europe. MPEG-4 a is more robust and efficient format that not only caters for new services such as HD (high definition) but also features a more efficient compression technology that allows better bandwidth utilisation. The fact that many African countries have very old and small footprints of analogue broadcasting infrastructure means that there is a very small legacy base to consider when introducing digital transmission in these markets. The only major legacy base that regulators will need to consider is the installed base of analogue television sets. Ultimately, this issue will be directly addressed by the STB. The bottom line is that African DTT will be cheaper for both broadcasters to deploy and end-users to acquire. DTT migration in Africa In a developed market, many consumers can afford to go out and buy a new television set with an integrated digital tuner capable of receiving DTT transmissions. In Africa, few households can afford a new digital television, but this is rather a blessing than a challenge. With a digital broadcast infrastructure up and running in many parts of the world, television manufactures have begun to dump large volumes of analogue television sets into late digital adoption markets such as Africa. This means that now, more than ever, many African households can afford to buy a television. The savings are significant as it is far cheaper to purchase an analogue television together with a DTT STB (which converts a digital transmission back to analogue), than it is to buy a digital television. The knock-on effect is also favourable, as these are nations well versed in redistributing their wares to others in the community. This means that the penetration of television usage across Africa will continue to grow exponentially. Another contributing factor to the timing of Africa’s digital migration is the maturity of the continent’s mobile networks. Many mobile network operators had to build their own backbone networks to support their operations and, as mobile subscriber additions begin to fall off, are now investigating alternative revenue streams, the most notable of which is selling excess capacity on the backbone networks to wholesale users. These backbones have sufficient capacity to distribute television signal to the DTT transmitters and offer a much more affordable solution for DTT providers than building their own. STB subsidies With a little over five years to go until the shutdown of analogue broadcasting signal worldwide, almost no countries in Africa have deployed commercial digital broadcasting networks with full national coverage. This means that most African countries will have dual illumination periods of between one and three years. If African governments are serious about meeting the 2015 deadline - which they are as signatories of the ITU - then attractive incentives would have to be introduced to coax users into making the switch. Not surprisingly, a number of countries are looking at zero rating sales taxes and import duties on STBs to lower end-user prices. Some markets, such as Kenya and South Africa, have taken this a step further by proposing to subsidise STBs. However subsidies are not only about driving rapid uptake. Even at US$50, the STB will be a significant purchase for most households in Africa, with approximately 30-40 per cent not being able to afford a STB at all. More than a digital TV tuner Yet STBs are now so much more than a zapper box, and even entry-level DTT STBs destined for Africa could soon be Internet-capable as USB ports become a standard feature. Broadcasters, STB manufactures and specialist STB software developers have made significant investments into the field of middleware, user interfaces and interactive applications. Today, STBs can run a myriad of applications from Video on Demand (VoD) to gaming, email and Web browsing. The Internet and STBs In terms of applications to run on connected STBs, the possibilities are endless. eGoverment services are obvious candidates for the Internet-connected DTT STB. Most economists agree that the key to stimulating long-term economic growth is to promote the development of small and medium enterprises. One example could be using a connected STB to submit a registration for a new company. According to doingbusiness.org, an initiative by the International Finance Corporation (IFC), Africa is the most expensive part of the world in which to set up a new company; it costs 20 times more than in Europe. Moving such procedures online, and accessible by a connected STB, could make a significant impact to economic development on the continent. Similar claims could be made for other government services as such education and revenue services. STBs can access much more than just eGovernment services. One can also view social media such as Twitter, Facebook and YouTube via a STB. Then too, with Adobe Flash embedded into STB middleware solutions, STBs could run virtually any Internet application. These Web 2.0 applications could further be enhanced by utilising broadcaster programming information metadata. For instance, Facebook users could share which programmes they are watching with their friends and make recommendations about the programme over Twitter. The market conditions are only now starting to come together to lay the foundation for a successful introduction of DTT in Africa. There is a strong case for sharing infrastructure with telecom networks as this will not only provide a backbone to distribute DTT signals nationally, but can also be used as a return path to provide Internet connectivity to the box. The STB is poised to become Africa’s most prolific digital device after the mobile phone, particularly with the help of government subsidies. Connecting these STBs will unlock a plethora of new services to Africa’s masses that will not only promote sustainable development, but will also connect a vast number of Africans to the world. Interestingly enough, in Africa it is convergence that will be driving connectivity rather than connectivity driving convergence, and the chosen platform for connecting Africa’s masses in the home will be the Internet-connected STB.