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Converging worlds - fixed and mobile meet the global economy

Alexis BerthillierIssue:Africa and the Middle East 2009
Article no.:5
Topic:Converging worlds - fixed and mobile meet the global economy
Author:Alexis Berthillier
Title:Head of Strategy and Planning
Organisation:Ericsson IP and Broadband
PDF size:176KB

About author

Alexis Berthillier is Senior Director Strategy and Planning at Ericsson IP and Broadband; he is responsible for the overall strategy as well as long-term business planning and standardization strategy for this product area. Mr Berthillier has over 15 years of experience in Telecommunications and Data Networking. Prior to Ericsson, Mr Berthillier worked at Juniper Networks as Director of Strategy and Planning. He previously held positions at Alcatel, Xylan, Unisys and AT&T. Alexis Berthillier has an engineering degree from the Institut National des Telecommunications in France.

 

Article abstract

Connecting all of Africa to the world will make a major difference to its competitiveness and economic and social growth. Affordable, energy efficient, wired and wireless broadband connectivity for Internet access is the highest priority. Traditional business models, especially in rural areas, will not work given the questionable return on investment but converged networks using a mixture of wired and wireless access, together with the new submarine cables, can give Africa the connectivity it needs to compete in world markets.

 

Full Article

Mobile communications has long played a critical role in helping lift disadvantaged - and disconnected - parts of the world out of poverty and enabling them to compete in the global economy. From the ITU’s overarching ‘Connect the World’ campaign, to initiatives by the GSMA to accelerate access to communications for communities throughout Africa, there is a consensus that communications has a critical role to play. Countries such as China and India already recognise, and act upon, the potential role communications in this regard. However, the challenge of connecting the unconnected remains great. While mobile coverage has improved significantly across all regions, the high-speed broadband connectivity required for key business and government applications and services in many developing countries is either not available or prohibitively expensive. Traditional telecom business models, especially in rural and remote areas, rarely justify the needed investment - the return is either quite slow or inexistent. Then too, in developing regions there tend to be too few people who have the training needed to install, operate and maintain the telecommunications infrastructure. On the macro-economic level, growth in ICT markets in Africa is outstripping GDP growth by 200 to 300 per cent. For example, in 2006-7, Kenya saw a GDP growth of 6.3 per cent, while the IT market grew 17.9 per cent. In Nigeria, according to figures from IDC, the difference was greater - GDP grew 4.6 per cent, but ICT grew 15 per cent. But where is this investment going? What is the balance between fixed and wireless and how does access to broadband services differ in rural and urban communities? The broadband landscape Fixed Internet access in Africa is characterised by low penetration of services due in part to the poor fixed line infrastructure coupled with the low installed base of PC terminals. There were an estimated 9.5 million Internet in 2008, which should grow to over 14 million by 2012. This Internet base, though, represents only 5.6 per cent of the African population, while the global average is 23.6 per cent. In North America, nearly 75 per cent of the population has Internet access, showing how much scope there is for development in the communications infrastructure across the continent. Mobile wireless network operators capitalise on this low level of fixed line penetration and use wireless broadband to meet the growing demand for Internet services. According to the ITU, Africa has the highest annual mobile communications growth of any region in the world. Analysts such as Portio Research expect mobile penetration will grow from 12 per cent in 2000 to 42 per cent by 2011. Within Africa, there is great disparity; South Africa reached 10 per cent penetration in late 2008 and finished the year with 44.51 million customers - a penetration rate of 101.8 per cent. Many parts of Africa are seeing the rollout of mobile broadband services; the GSA reports that 25 operators have launched commercial HSPA mobile broadband services in 14 African countries. However, ITU observed that the growth in mobile coverage has not been matched by a corresponding growth in the fixed, high-speed broadband connections that businesses need in order to compete in the global economy. Fixed broadband is critical; it gives businesses and governments the high-speed connectivity they need to deliver services that can really transform economies and societies. Starting from a very low level, broadband is now gaining momentum and is currently at around 1.4 million connections, with countries such as Morocco, Egypt and Tunisia in North Africa leading the way in the adoption of broadband services. By 2012, IDC forecasts that the African continent should have around 10.5 million broadband connections. While this number is still very low, it is clear that the growth in fixed broadband will soon mirror that for mobile, transforming, initially in major cities access by businesses to the global economy. We have a vision of full service broadband, the concept of broadband access and services for everyone, and of the social and economic benefits it will bring. This vision aligns well with how telecoms in Africa will evolve and is truly critical to the socio economic development of the continent. We believe that there will be an appropriate mix of access technologies based on copper (DSL), fibre, and wireless to serve the business, residential, urban and rural communities. The network will then consist of a converged IP/Ethernet edge as the key section of the network that delivers the services to the connected end users, and an IP core. Africa has the ability to leapfrog other countries by building this converged network on ‘day one’ and immediately realise cost and efficiency benefits. This year has already seen significant developments in connecting the continent via fibre cables in East and West Africa, with new services expecting to come online next year. In Q2 and Q3 of 2009 submarine fibre cables will land in East Africa for the first time. TEAMS will connect Kenya to the FLAG system with a capacity of 40GB while SEACOM will link East Africa with a capacity of 1.2TB. IDC predicts that the likely impact of this dramatic increase in available bandwidth is that price of international data will drop from its current US$3000 per MB to around US$650 per MB. The dramatic slashing of international data costs of will transform the ability of African businesses to compete in the global economy, so it can compete, for example, in the burgeoning off-shoring market that has already helped transform the economies of China and India. Developing IP infrastructure As the ICT infrastructure grows, other aspects of the continent’s infrastructure also need to develop. One challenge is that of access to a reliable electricity infrastructure. Research by the World Bank has revealed that power blights growth in developing countries. While South Africa actually performs better than such G14 economies as the UK and Sweden with just 6.1 per cent of output lost due to power transmission and distribution losses, Nigeria loses some 33 per cent of its output and the Congo over 73 per cent. Conversely, Egypt and Kenya both fare much better than India (12.2 per cent and 17.4 per cent, compared to 26.3 per cent respectively). So, while power is an issue, for many parts of East Africa the situation is often manageable provided the growth in ICT is managed so not to exacerbate a finely balanced situation. Lowering the power consumption of the communications infrastructure being built across Africa will be essential. Network equipment manufacturers are working hard to drive the energy consumption of the equipment at the heart of the new high-speed networks. Energy usage accounts for up to 50 per cent of an operator’s operating expenses and energy costs continue to rise, So service providers using IP technology to deliver bandwidth-intensive services to an ever-growing number of fixed and mobile subscribers, need to understand where to find efficiencies without impacting service or losing control of costs. Since the IP edge and metro Ethernet platforms are responsible for aligning, shaping and monitoring subscriber traffic and the circuits that deliver that traffic, they are logical hot spots for service providers to target. As mentioned above, Africa has an opportunity to build Multi-service IP Edge networks from day one and realise these energy saving immediately. Converging worlds Free of legacy networks and investments, Africa has a tremendous opportunity to bypass other more ‘telecom-intensive’ societies by building IP-based fixed/mobile converged network from day one. By investing in an IP infrastructure that has the right scaling capabilities for subscribers and bandwidth, African service providers can be a major driving force in the economic development and growth of their market. They can learn from their European counterparts and avoid building multiple networks for residential, business and wireless. Tying multiple access technologies into a single infrastructure, combining both wireless and wired networks is the final step in Africa’s communications development. Each technology has its own role to play, from creating the business hotspots with high-speed fibre access to wireless connectivity in remote rural areas opening up the delivery of public services, such as remote healthcare and education, to previously isolated areas. Incorporating both fixed and mobile networks into a single subscriber and service-aware architecture enables service providers to serve fixed and mobile, and residential and business customers on the same network - each with appropriate quality of service (QoS) and tariffs. A converged network with suitable QoS can attract external business investment and spur the growth of new industries such as offshore call centres. Converged networks also better utilises the workforce and spread the wealth in both urban and rural regions, since the network enables remote working, via both fixed and mobile access. With a modern fixed/wireless converged IP infrastructure delivering high speed access for applications and services, African businesses will be able to compete at the leading edge of the global economy and challenge countries such as India and China in the delivery of new services and industries.

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