Guaranteeing quality connectivity across the Africa continent

  • 144 views
Uploaded on

 

More in: Technology , Business , Travel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
144
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
1
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. This document is offered compliments of BSP Media Group. www.bspmediagroup.com All rights reserved.
  • 2. GUARANTEEING QUALITY CONNECTIVITY ACROSS THE AFRICA CONTINENT Kanagaratnam Lambotharan Chief Enterprise Business Officer at MTN 14 November 2013 Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 1
  • 3. CONTENT How does Africa fare internationally on network and connectivity? What is holding Africa back? What is required for Africa to become a world-class contender Recommended solutions that should be explored Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 2
  • 4. CONTENT How does Africa fare internationally on network and connectivity? What is holding Africa back? What is required for Africa to become a world-class contender Recommended solutions that should be explored Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 3
  • 5. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Mobile penetration by region (2005 – 2013) 63.5 12.4 Africa Arab States Asia Pacific CIS Europe Americas Source: ITU, % Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 4
  • 6. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Fixed line penetration by region (2005 – 2013) Fixed line declining internationally 1.5 1.4 Africa Arab States Asia Pacific CIS Europe Americas Source: ITU, % Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 5
  • 7. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Fixed broadband subscriptions (2005 – 2013) Africa’s broadband subscription has stagnated 0.3 Africa Arab States Asia Pacific CIS Europe Americas Source: ITU, % Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 6
  • 8. HOW DOES AFRICA FARE INTERNATIONALLY ON NETWORK AND CONNECTIVITY % Mobile broadband subscriptions (2010 – 2013) Africa is behind in mobile broadband 10.9 1.8 Africa Arab States Asia Pacific 2010 2011 CIS 2012 Europe Americas 2013 Source: ITU, % Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 7
  • 9. AFRICA SUBMARINE TRANSFORMATION 2008 2013  Significant opportunities presented to nations, governments and operators with this change  Key benefit should be boost to economic growth via improved access to information, commerce, services and education  Beneficial connection of West Africa to the digital age requires that outstanding challenges be addressed Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 8
  • 10. AVAILABILITY OF DEVICES, NETWORK GROWTH – SMARTPHONES Africa is one such market Varying estimates of smartphone penetration, from 3% to 17%, all agree penetration is increasing Samsung estimates that it now stands at 7%, up from 5% percent last year (HumanIPO) Basic phones (2G) 2010 Feature phones (2G) Smartphones (2G / 3G) 2013 Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. Super smartphones (3G / LTE) 2016 9
  • 11. AN INTERNATIONAL PERSPECTIVE BRICS countries and Nigeria broadband and wireless penetration by access technology(%) 32 23 Fast, pervasive BB is increasingly seen as a critical piece of economic infrastructure 22 12 11 8 6.0 6 3 0.1 0.1 1 0.1 To remain globally competitive, Africa’s challenge is to build a pervasive Broadband Access network, fast 9 8 4 Global competition for inward investment, jobs and e-skills 1 2 Nigeria Brazil Russia India China SA 1 230 8 214 8 675 1 111 3 678 5 827 Wireline Fixed broadband - wireline Wireless broadband & 3G Fixed broadband - wireless Africa is well positioned in the BB race thanks to substantial mobile network investment ~100 Billion USD new investment needs to flow to maintain this position Source: Assessment of Economic Impact of Wireless Broadband in Nigeria 2009 – Analysis Mason Final Report for GSM (2011) GDP per Capita US$ Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 10
  • 12. KEY DRIVERS FOR AFRICA’S GROWTH IN BROADBAND A larger, younger, more affluent population Africa’s urbanising population Africa is leapfrogging through technology Africa’s commodity wealth Africa’s expansion of its financial sector Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 11
  • 13. CONTENT How does Africa fare internationally on network and connectivity? What is holding Africa back? What is required for Africa to become a world-class contender Recommended solutions that should be explored Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 12
  • 14. WHAT IS HOLDING AFRICA BACK – REAL CHALLENGES? The size of Africa Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 13
  • 15. WHAT IS HOLDING AFRICA BACK – REAL CHALLENGES? TIME – Labour intensive TIME / COST – Terrain Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. COST – Heavy machinery 14
  • 16. WHAT IS HOLDING AFRICA BACK ? Funding Regulatory challenges Historically limited infrastructure expansion Support and Incentives for infrastructural rollout Spectrum allocation bottlenecks Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 15
  • 17. WHAT IS REQUIRED FOR AFRICA TO BECOME A WORLDCLASS CONTENDER IN TOP BROADBAND & TELECOMS? Mobile and wireless will dominate broadband TUNISIA ALGERIA LIBYA EGYPT WESTERN SAHARA MAURITANIA CAPE VERDE SENEGAL THE GAMBIA GUINEA CHAD ERITREA SUDAN BURKINA FASO COTE D`IVOIRE LIBERIA SIERRA LEONE NIGER BENIN TOGO GHANA GUINEA-BISSAU MALI DJUBOUTI NIGERIA CAMEROON EQUATORIAL GUINEA SAO TOME AND PRINCIPE ETHIOPIA CENTRAL AFRICAN REPUBLIC GABON 1bn people but sparse population UGANDA KENYA RWANDA DEMOCRATIC REPUBLIC OF THE CONGO (ZAIRE) BURUNDI TANZANIA SEYCHELLES MALAWI ANGOLA ZAMBIA NAMIBIA ZIMBABWE BOTSWANA SWAZILAND MTN Business delivery of services SOUTH LESOTHO AFRICA Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. MAURITIUS Fibre investment is key but shared infrastructure models due to high costs 16
  • 18. WHAT IS HOLDING AFRICA BACK – DEVICES ADOPTION? Basic US$50US$80 Socialite US$100US$200 Mainstream US$200US$300 Flagship US$300US$450 Hero US$450US$600 4 key challenges Distribution OEMs have limited resources in Africa Import Costs Duties and customs need refinement Education Consumer education and adoption Underlying Costs Operator driven initiatives are key but what about other private sectors ? Iconic US$600+ Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 17
  • 19. CONTENT How does Africa fare internationally on network and connectivity? What is holding Africa back? What is required for Africa to become a world-class contender Recommended solutions that should be explored Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 18
  • 20. Contribution to the target UNDERSTANDING THE ROLE OF PRIVATE SECTOR VS GOVERNMENT (II) Government • Policy & regulatory framework (eg. spectrum licensing, access regulation, investment certainty, IT-literacy) • Local regulations (planning, environmental laws, …) • Smart subsidies • Long-term market support (supply/demand-side subsidies) Private sector • Risk capital • Market knowledge • Technology & distribution know-how • Innovation & platform competition • Scale & efficiency • Competitive “trial & error” • Optimum network configuration (sharing) & market structure 100% access target Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 19
  • 21. POLICIES THAT HAVE A DIRECT IMPACT ON BROADBAND INVESTMENT AND TAKE-UP Wireless CAPEX in Europe vs USA USA 174 Index 2007 = 100 2007 2008 2009 2010 2011 2012 Large scale operators • Significant consolidation activity around fibre and spectrum assets • 97 • Early and large blocks of LTE spectrum allocated 2013 LTE connections (% of total) Europe vs USA Europe • Highly fragmented markets • Severe and continuous price interventions (LLU, MTRs, roaming) • 18.9 Cautious approach to consolidation 1.7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2014 Source: GMSA Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 20
  • 22. Low income households POLICIES THAT ENABLE PRIVATE SECTOR VS GOVERNMENT True access gap Smart subsidy zone Private and public partnership are key to drive underserviced areas High income households Market efficiency gap Current network reach and access Commercially feasible reach Geographical reach Given the right policies, many of the objectives can be realised via the market After one time subsidy, will become commercially feasible Requires ongoing support USAASA Fund to be leveraged by operators to bid for access to fulfil the rural development objectives 100% geographical coverage Source: Initial concept in telecommunication & information services for the poor: towards a strategy for universal access by J. Navas-Sabater, A. Dymond, N. Juntunen, 2000 – modified by Intelecon Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 21
  • 23. ALL PLATFORMS HAVE A ROLE DELIVERING BROADBAND TO AFRICA BB coverage cost per platform (stylized) Cost per pop (US$) With mobile coverage costs increasing exponentially for the last 10% coverage, Satellite is the likely in-fill Mobile Fibre In urban areas, population and income density supports multiplatform / multiplayer competition (incl. fibre, copper, Wimax,…) Satellite Mobile is expected to be the most economic platform for a large part of Africa 100% coverage Dense Urban Urban Suburban Rural Very rural Although mobile technology is likely to be prime delivery mechanism for BB coverage. Ubiquitous coverage will require a patchwork of fit-for-purpose platforms and pragmatic network sharing / integration arrangements (eg. fibre backhaul + mobile access; spectrum pooling / RAN sharing in rural areas…). Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 22
  • 24. FRAGMENTING SPECTRUM TO ALLOW FOR ENTRY COULD INCREASE NETWORK COSTS BY A FACTOR Number of sites needed to deliver specified capacity: 2Mbps, 90% coverage Fragmenting spectrum to allow for multiple new entries increases networks costs exponentially, leading to higher end-user prices 20,000 Radio sites required to deliver 2Mbps to 4 simultaneous users 18,000 • Can’t be done with 2x5MHz • c. 20 000 sites with 2x10 MHz • c. 12 000 sites with 2x15 MHz • c. 10 000 sites with 2x20 MHz It costs twice as much to deliver the required capacity with 2x10MHz than 2x20MHz Number of sites 16,000 14,000 12,000 10,000 8,000 6,000 Typical awards (Europe) are 4,000 2,000 0 2 4 6 8 10 12 Required capacity (relative number of simultaneous users) 5Mhz 10Mhz 15Mhz • 2x 15-20MHz in 2.6GHz; and • 2x 10-15MHz in sub-1GHz band NB: Lack of pervasive backhaul infrastructure in Africa may require even larger blocks to support adequate QoS 20Mhz Source: Ofcom, Second consultation on assessment of future mobile competition and proposals for the award of 800 MHz and 2.6 GHz spectrum and related issues, Jan 2012. Annex 6: Revised Competition Assessment. The LTE network modelled here operates in the1800MHz band Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 23
  • 25. COST TO CONNECT 10M SA HOUSEHOLDS WITH FIBRE – R150BN TO R200BN Target 10m of 14.5m households 78% formal dwellings 65% urbanisation <10% multi-tenant dwellings COSTS FOR FIBRE CONNECTION Approximately R15 000 to R20 000 per household R150bn to R200bn MTN SA invests R1.5bn to R2bn a year on Transmission/Transport network Will take 100 operator years (25 years with 4 operators) Without considering overbuild 88% mobile phones Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 24
  • 26. INFRASTRUCTURE INVESTMENT – HOW TO CONNECT 10 MILLION HOUSEHOLDS ? 4 years for National Fibre networks of over 3 000km – Way leaves, Permitting process, Inconsistency in Local Approvals Unbundling, OTT players, continuous subsidies for smaller players = Reduction in investment Price pressure, regulatory intervention = Reduction in investment Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. MTN – R1.5 BN TO R 2BN investment pa on transmission = 100 operator years to reach goal Lack of coordination increases time to reach goal 25
  • 27. CONTENT How does Africa fare internationally on network and connectivity? What is holding Africa back? What is required for Africa to become a world-class contender Recommended solutions that should be explored Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 26
  • 28. THE AFRICAN BROADBAND AGENDA – KEY QUESTIONS Spectrum Consolidation & network sharing Rights of way Regulated open access vs need for profit Attracting BB investment Smart USO mechanisms Other incentives 128 kbps, 10 Mbps, 100 Mbps or more Densely populated areas Remote areas 10Mbps everywhere = >US$100bn 100Mbs everywhere = US$$$ bn Private sector vs Public sector Leveraging government, utilities, education Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 27
  • 29. CONCLUSION: POSSIBLE SOLUTIONS • Mobile is key to delivering a gigantic share of broadband (but fibre is needed in backhaul and backbone) • Don’t fragment spectrum allocations: this increases costs • Leverage incumbents investment capacity / existing infrastructure • Encourage competition through service-neutral licensing • Delicate mix between infrastructure and service-based competition, incumbents and network sharing in rural areas likely to be key to deliver Broadband in Africa • Remove special taxes & duties on ICT equipment and services, to bring down prices, grow services and general tax base • Free up ,release and coordinate critical spectrum for wireless broadband use, through competitive evaluation and allocation of spectrum • Reduce costs & prevent unnecessary duplication through incentivising infrastructure-sharing • Use existing unused USAF levies to build out network into underserved areas, through reverse-bidding to service areas & in support of demand stimulation strategies including e-skills development • Focus SOEs on delivering support infrastructure in rural areas (fibre backhaul) • Subsidies for rural access and capacity expansion • Incentives for innovation Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 28
  • 30. DIGITAL PARTICIPATION CURVE Internet user base vs Digital participation curve Average Internet user needs to be online for 5 years or more before engaging actively with high-level applications – online retail and interactive Requires experience, comfort, confidence and trust 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 Source: World Wide Worx 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 Internet users in SA 5 year participation curve Internet Access in SA 2012, World Wide Worx Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 29
  • 31. “MTN’S NEW SMART DEVICE – CONNECTING THE UNCONNECTED” Affordable 6TH SENSE UI Most affordable Smartphone in SA, R499 Simple, easy & comfortable to use Unique contextual Ad Banner Performance Great Apps Training Service Data Qualcomm Snapdragon Extensive training and tutorial videos to get started Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. Exclusive pre-loads Free social, email and internet for 3 months 30
  • 32. THANK YOU Questions? Copyright 14 November 2013 © Mobile Telephone Networks. All rights reserved. 31 31